Chairman Frank McCullough
welcomed newly confirmed Trustee D. Patrick Curley of OrchardPark
to the Board.By way of background,
Chairman McCullough stated that Trustee Curley comes to the Authority’s Board
with significant experience and noted that Trustee Curley is the President of
St. Lawrence Business Consultants Ltd., a financial consulting firm that he
founded in 1977, where one of his specialties is economic development.Prior to that, Trustee Curley had served as
an Assistant Vice President for Finance at a Fortune 100 company and as a
corporate loan officer at Marine Midland Bank, now HSBC.Trustee Curley served three terms on the OrchardParkTown
Board from 1980 to 1991.He currently
chairs the Board of Trustees of ErieCounty Central Police
Services, an administrative criminal justice agency, and has been a member of
the Orchard Park Fire Company for nearly 40 years.Chairman McCullough said that he is glad to
have Trustee Curley as a member of the Authority’s Board of Trustees.Trustee Curley thanked Chairman McCullough
for the warm welcome.1.Approval of the
Minutes

The Minutes of the Regular Meeting of September
25, 2007 were unanimously adopted.

President
Roger Kelley also welcomed Trustee Curley to the Authority’s Board of
Trustees.President Kelley encouraged
Mr. Curley to call upon him if he had any questions.President Kelley then introduced and welcomed
Mr. Gil Quiniones as the Authority’s new Executive Vice President – Energy
Marketing and Corporate Affairs.He said
that prior to coming to the Authority, Mr. Quiniones had served as Senior Vice
President for Energy and Telecommunications for the New York City Economic
Development Corporation and Chairman of the New York City Energy Policy Task
Force.President Kelley said that he is
pleased that the Authority is bringing Mr. Quiniones on board in this new and
vitally important position.He said that
Mr. Quiniones’ broad experiences in the utility industry and government in
shaping enlightened energy policies are consistent with the Authority’s
initiatives in supporting Governor Spitzer’s efforts for diversified energy
supplies, clean air and growing jobs for the economy.President Kelley said that Mr. Quiniones’
contributions over the years in his former position strengthened the
Authority’s partnership with New York City in meeting the electricity needs of
schools, hospitals, subways, commuter trains, bridges, tunnels, airports,
street lights and other public utilities and lowering their energy bills.He said that Mr. Quiniones will be
responsible for overseeing four Authority business units that work together
with customer groups and the public:Marketing and Economic Development, Public and Governmental Affairs,
Energy Services and Technology and Supply Planning, Pricing and Power
Contracts.In addition, Mr. Quiniones
will assist in overseeing new Authority projects.President Kelley said that Mr. Quiniones’
position had been created in response to the Authority-commissioned Hay report,
which had recommended such an executive-level position to oversee the
Authority’s work with all of its external stakeholders.President Kelley added that he is very happy
to have Mr. Quiniones here.

President
Kelley said that work continues on the extremely important energy efficiency
and clean energy collaborative process that has evolved as a result of the
Governor’s “15 by 15” initiative.President Kelley said that the clean energy collaborative group, which
includes the heads of all key authorities and State agencies, is meeting on a
monthly basis.He said that Mr. Angelo
Esposito is putting forth his best efforts in this regard to continue to
promote and expand the Authority’s successful Energy Services and Technology
program.President Kelley said that the
Lieutenant Governor’s Renewable Energy Task Force, of which he is the Authority’s
official member.President Kelley stated
that each of the Task Force’s four subcommittees have each developed five
recommendations, all 20 of which have been submitted to the Governor’s
Office.These 20 recommendations are
being looked at from regulatory, financial and public policy perspectives.In addition to Mr. Esposito, the following
Authority staff will be working on these initiatives:Mr. Quiniones on the financial side, Ms.
Agnes Harris on the workforce development, education and economic development
side and Mr. John Osinski on the regulatory and legislative side, with Mr.
Brian Warner as President Kelley’s designee.

President
Kelley stated that he recently toured the Life Extension and Modernization
project at the Blenheim-Gilboa Pumped Storage Project, which he said is moving along
well.The project is on schedule with
the second unit, allowing for some workarounds, as well as being on budget.

President
Kelley then advised the Trustees that in the very near future the Authority
would be issuing a Request for Proposals for the future energy requirements of
the Authority’s New York City Governmental Customers, in view of the scheduled
closure of the Poletti power plant in January 2010.He added that the options for the near term
included seeking bids from power generating firms that already have permits to
provide the additional capacity, while the long-term plans may include the
potential for the construction of additional generating capacity.

Chairman
McCullough said that he appreciates the tremendous energy that President Kelley
is putting into his job and complimented him on his efforts on behalf of the
Authority.He also said that the
Trustees should feel free to ask President Kelley any questions they may have.

The President and Chief Executive
Officer submitted the following report:

SUMMARY

“The Trustees are requested to
approve extended benefits for 38 Power for Jobs (‘PFJ’) customers as listed in
Exhibit ‘4-A.’These customers have been
recommended to receive such extended benefits by the Economic Development Power
Allocation Board (‘EDPAB’).

BACKGROUND

“In
July 1997, the New York State Legislature approved a program to provide
low-cost power to businesses and not-for-profit corporations that agree to
retain or create jobs in New YorkState.In return for commitments to create or retain
jobs, successful applicants receive three-year contracts for PFJ electricity.

“The PFJ program originally made
400 megawatts (‘MW’) of power available.The program was to be phased in over three years, with approximately 133
MW made available each year.In July
1998, as a result of the initial success of the program, the Legislature
amended the PFJ statute to accelerate the distribution of the power and
increase the size of the program to 450 MW.

“In May
2000, legislation was enacted that authorized another 300 MW of power to be
allocated under the PFJ program.Legislation further amended the program in July 2002.

“Chapter
59 of the Laws of 2004 extended the benefits for PFJ customers whose contracts
expired before the end of the program in 2005.Such customers had to choose to receive an ‘electricity savings
reimbursement’ rebate and/or a power contract extension.The Authority was also authorized to
voluntarily fund the rebates, if deemed feasible and advisable by the Trustees.

“PFJ customers whose contracts
expired on or prior to November 30, 2004 were eligible for a rebate to the
extent funded by the Authority from the date their contract expired through
December 31, 2005.

“PFJ customers whose contracts
expired after November 30, 2004 were eligible for rebate or contract extension,
assuming funding by the Authority, from the date their contracts expired
through December 31, 2005.

“Approved contract extensions
entitled customers to receive the power from the Authority pursuant to a
sale-for-resale agreement with the customer’s local utility.Separate allocation contracts between
customers and the Authority contained job commitments enforceable by the
Authority.

“In 2005, provisions of the
approved State budget extended the period PFJ customers could receive benefits
until December 31, 2006.Chapter 645 of
the Laws of 2006 included provisions extending program benefits until June 30,
2007.In 2007, a new law (Chapter 89 of
the Laws of 2007) included provisions extending program benefits until June 30,
2008.

“At its meeting of October 18,
2005, EDPAB approved criteria under which applicants whose extended benefits
EDPAB had reduced for non-compliance with their job commitments could apply to
have their PFJ benefits reinstated in whole or in part.EDPAB authorized staff to create a short-form
application, notify customers of the process, send customers the application
and evaluate reconsideration requests based on the approved criteria.

DISCUSSION

“At its meeting on October 30,
2007, EDPAB recommended that the Authority’s Trustees approve electricity
savings reimbursement rebates to the 38 businesses listed in Exhibit ‘4-A.’Collectively, these organizations have agreed
to retain more than 64,000 jobs in New York State in exchange for the
rebates.

“The
Trustees are requested to approve the payment and funding of rebates for the
companies listed in Exhibit ‘4-A’ in a total amount currently not expected to
exceed $4.1 million.Staff recommends
that the Trustees authorize a withdrawal of monies from the Operating Fund for
the payment of such amount, provided that such amount is not needed at the time
of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the
General Resolution Authorizing Revenue Obligations, as amended and
supplemented.Staff expects to present
the Trustees with requests for additional funding for rebates to the companies
listed in Exhibit ‘4-A’ in the future.

FISCAL INFORMATION

“Funding of rebates for the
companies listed on Exhibit ‘4-A’ is not expected to exceed $4.1 million.Payments will be made from the Operating
Fund.To date, the Trustees have
approved $98 million in rebates.

RECOMMENDATION

“The Executive Vice President and
Chief Financial Officer and the Director – Business Power Allocations,
Compliance and Municipal and Cooperative Marketing recommend that the Trustees
approve the payment of electricity savings reimbursements to the Power for Jobs
customers listed in Exhibit ‘4-A.’

“The
Executive Vice President, General Counsel and Chief of Staff, the Senior Vice
President – Marketing and Economic Development, the Senior Vice President –
Public and Governmental Affairs and I concur in the recommendation.”

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has recommended that the
Authority approve electricity savings reimbursements to the Power for Jobs
(“PFJ”) customers listed in Exhibit “4-A”;

NOW
THEREFORE BE IT RESOLVED, That to
implement such EDPAB recommendations, the Authority hereby approves the payment
of electricity savings reimbursements to the companies listed in Exhibit “4-A,”
and that the Authority finds that such payments for electricity savings
reimbursements are in all respects reasonable, consistent with the requirements
of the PFJ program and in the public interest; and be it further

RESOLVED, That based on staff’s recommendation, it is hereby authorized
that payments be made for electricity savings reimbursements as described in
the foregoing report of the President and Chief Executive Officer in the
aggregate amount of up to $4.1 million, and it is hereby found that amounts may
properly be withdrawn from the Operating Fund to fund such payments; and be it
further

RESOLVED, That such monies may
be withdrawn pursuant to the foregoing resolution upon the certification on the
date of such withdrawal by the Vice President – Finance or the Treasurer that
the amount to be withdrawn is not then needed for any of the purposes specified
in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue
Obligations, as amended and supplemented; and be it further

RESOLVED, That the Senior Vice President –
Marketing and Economic Development, or his designee, be, and hereby is,
authorized to negotiate and execute any and all documents necessary or
desirable to effectuate the foregoing, subject to approval of the form thereof
by the Executive Vice President, General Counsel and Chief of Staff; and be it
further

RESOLVED, That the
Chairman, the President and Chief Executive Officer and all other officers of
the Authority are, and each of them hereby is, authorized on behalf of the
Authority to do any and all things and take any and all actions and execute and
deliver any and all certificates, agreements and other documents to effectuate
the foregoing resolutions, subject to the approval of the form thereof by the
Executive Vice President, General Counsel and Chief of Staff.

Mr.
James Pasquale presented the highlights of staff’s recommendations to the
Trustees.In response to a question from
Chairman McCullough, Mr. Pasquale said that only one customer had gone through
the reconsideration procedure offered to customers whose allocations are cut
due to job shortfalls.

The President and Chief Executive
Officer submitted the following report:

“The Trustees arerequested to approve modifications to the
benefits for 25 Power for Jobs (‘PFJ’) customers and four Energy Cost Savings
Benefit (‘ECSB’) customers as detailed in Exhibits ‘5-A’ and ‘5-B’ that have
reported actual job numbers below their contractual commitments.The Trustees are requested to approve that
these customers have their allocations reduced proportionately to their job
shortfalls where appropriate.In
addition, the Trustees are requested to approve that no modifications be made
to the benefits for 28 PFJ customers and eight ECSB customers that, after
having reported actual job numbers below their contractual commitments, have
applied for and met the criteria to have their benefits reinstated in full
through the reconsideration process.

BACKGROUND

“PFJ
provides either power or electricity savings reimbursements to businesses and
not-for-profit corporations that have agreed to retain or create jobs in New YorkState.Businesses may have their benefits reduced if they fail to meet their
contractual commitments.

“ECSBs protect certain Authority
power program customers from bill increases that resulted from higher market
prices.These businesses may also have
their benefits reduced if they fail to meet their contractual commitments.

“In 2007, a new law (Chapter 89 of
the Laws of 2007) included provisions extending program benefits for both
programs until June 30, 2008.

“At its meeting of October 18,
2005, the Economic Development Power Allocation Board (‘EDPAB’) approved
reconsideration criteria under which applicants whose extended benefits EDPAB
had reduced for non-compliance with their job commitments could apply to have
their benefits reinstated in whole or in part.EDPAB authorized staff to create a short-form application, notify
customers of the process, send customers the application and evaluate
reconsideration requests based on the approved criteria.

DISCUSSION

“At its meeting on June 25, 2007,
EDPAB recommended that the Authority’s Trustees approve the extension of
benefits for 524 PFJ and 106 ECSB program customers through June 30, 2008.In
light of a legislative mandate that current PFJ and ESCB program participants
receive extended benefits with minimal disruption, a blanket extension
was given subject to staff review of the customers’ applications to determine
if they are in compliance with their prior contractual commitments.

“In the past, EDPAB would recommend
that the Trustees reduce allocations before the customers had an opportunity to
apply for reconsideration.To facilitate
a more efficient process, due in part to the short period of time left before
the programs expire, staff sent the reconsideration criteria mentioned above to
those customers that had reported job numbers below their contractual
commitments.

“Staff has completed its review of
53 PFJ customers and 12 ESCB customers whose applications indicated job
commitment shortfalls as listed on Exhibits ‘5-A’ and ‘5-B.’Staff received and reviewed 49 letters from
these customers making the case to keep their full benefits.

“Twenty-eight PFJ and eight ECSB
customers met the criteria in full and therefore staff recommends that these
customers have no modification made to their benefits.

“Staff has determined that six PFJ customers
have partially met the criteria and therefore should have their allocations
reduced in part based on their job shortfalls, where appropriate.

“Finally, staff recommends that 19
PFJ customers and four ECSB customers that have either not submitted a request
for reconsideration or have not met the criteria have their allocations reduced
proportionately to their job shortfalls.

RECOMMENDATION

“The Director – Business Power
Allocations, Compliance and Municipal and Cooperative Marketing recommends that
the Trustees approve modifications to the benefits for 25 Power for Jobs
customers and four Energy Cost Savings Benefit customers to have their benefits
reduced proportionately to their job commitment shortfalls, where
appropriate.In addition, the Trustees
are requested to approve that no modifications be made to the benefits for 28
Power for Jobs customers and eight Energy Cost Savings Benefit customers that,
after having reported actual job numbers below their contractual commitments,
have applied for and met the criteria to have their benefits reinstated in full
through the reconsideration process.The
above recommendations are detailed in Exhibits 5-A’ and ‘5-B.’

“The
Executive Vice President, General Counsel and Chief of Staff, the Executive Vice
President and Chief Financial Officer, the Senior Vice President – Marketing
and Economic Development, the Senior Vice President – Public and Governmental
Affairs and I concur in the recommendation.”

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has
recommended that the Authority approve modifications, where appropriate, to 25
allocations for Power for Jobs (“PFJ”) customers and four for Energy Cost
Savings Benefit (“ECSB”) customers that have applied to have their benefits
extended and reported actual job numbers below their contractual commitments,
as detailed in Exhibits “5-A” and “5-B”; and

WHEREAS, EDPAB has recommended that the Authority
approve that no modifications be made to the benefits for 28 PFJ customers and eight
ECSB customers that have applied to have their benefits reinstated after having
applied for and met the approved reconsideration criteria n full, as detailed
in Exhibit “5-A” and “5-B”;

NOW THEREFORE BE
IT RESOLVED, That the Senior Vice
President – Marketing and Economic Development or his designee be, and hereby
is, authorized to negotiate and execute any and all documents necessary or
desirable to effectuate the foregoing, subject to the approval of the form
thereof by the Executive Vice President, General Counsel and Chief of Staff;
and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer
and all other officers of the Authority are, and each of them thereby is,
authorized on behalf of the Authority to do any and all things and take any and
all actions and execute and deliver any and all certificates, agreements and
other documents to effectuate the foregoing resolutions, subject to the
approval of the form thereof by the Executive Vice President, General Counsel
and Chief of Staff.

The President and Chief Executive
Officer submitted the following report:

SUMMARY

“The Trustees are requested to
approve an allocation of available Replacement Power (‘RP’) totaling 1,990 kW
to four industrial companies.

BACKGROUND

“Under Section
1005(13) of the Power Authority Act, as amended by Chapter 313 of the Laws of
2005, the Authority may contract to allocate or reallocate directly, or by sale
for resale, 250 MW of firm hydroelectric power as Expansion Power and up to 445
MW of RP to businesses in the State located within 30 miles of the Niagara
Power Project, provided that the amount of power allocated to businesses in
Chautauqua County on January 1, 1987 shall continue to be allocated in such
county.Allocations are made pursuant to
criteria set forth in Section 1005(13).

“On October 22, 2003, the
Authority, National Grid, Empire State Development Corporation and the Buffalo
Niagara Enterprise signed a Memorandum of Understanding (‘MOU’) that outlines
the process to coordinate marketing and allocating Authority hydropower.The entities noted above have formed the
Western New York Advisory Group (‘Advisory Group’) with the intent of better
using the value of this resource to improve the economy of Western New York and
the State of New York.Nothing in the MOU changes the legal
requirements applicable to the allocation of hydropower.

DISCUSSION

“Staff recommends and the
Advisory Group supports the available power being allocated to the four
companies set forth in Exhibit ‘6-A.’The Exhibit shows, among other things, the amount of power requested,
the recommended allocation and additional employment and capital investment information.These projects will help maintain and diversify the industrial base of Western New York and provide new employment
opportunities.They are projected to
result in the creation of 173 jobs.

RECOMMENDATION

“The Director –
Business Power Allocations, Compliance and Municipal and Cooperative Marketing
recommends that the Trustees approve the allocation of 1,990 kW of hydropower
to the companies listed in Exhibit ‘6-A.’

“The Executive
Vice President, General Counsel and Chief of Staff, the Senior Vice President –
Marketing and Economic Development and I concur in the recommendation.”

The
following resolution, as submitted by the President and Chief Executive
Officer, was unanimously adopted.

RESOLVED, That the allocation of 1,990 kW of Replacement Power, as
detailed in Exhibit “6-A,” be, and hereby is, approved on the terms set forth
in the foregoing report of the President and Chief Executive Officer; and be it
further

RESOLVED, That the Chairman, the
President and Chief Executive Officer and all other officers of the Authority
are, and each of them hereby is, authorized on behalf of the Authority to do
any and all things, take any and all actions and execute and deliver any and
all agreements, certificates and other documents to effectuate the foregoing
resolution, subject to the approval of the form thereof by the Executive Vice
President, General Counsel and Chief of Staff.

Business Activity:Manufacturer
of United States Postal Service (USPS) stamped envelopes

Project Description:Ashton
Potter has an existing facility in Amherst;
however, the company will be expanding its operations by leasing a building in Depew. The project will include making building modifications
and adding new equipment.The company
will purchase and install new equipment, including presses, ink jet systems and
other manufacturing equipment. It will also make building improvements,
including foundation work, installing HVAC, compressors and humidifier systems.

Existing Allocation:None

Power Request:712 kW

Power
Recommended:700 kW

Job Commitment:

Existing:0jobs

New:48 jobs

New Jobs/Power Ratio:69 jobs/MW

New Jobs -

Avg. Wage and Benefits:$31,000

Capital Investment:$2.93
million

Capital Investment per MW: $4.19 million/MW

Summary: Ashton Potter, primarily a print
manufacturing company, produces and sells secured documents. The majority of
its business results from a long-term contract with the USPS. It is one of
three companies that print postal stamps.The company is competing for a new USPS project
with a Virginia
company that currently performs the work.A low-cost power allocation will help Ashton Potter reduce its cost and
compete effectively. The Empire
State Development Corporation has pre-approved a grant for this project.

Project Description:The
project would include an expansion at the company’s existing site, including
installing overhead cranes, rails and machinery for its mix operation. In
addition, the company will install concrete forms and new generators. The
expansion will also include new lighting and cooling systems.

Existing Allocation:None

Power Request:110 kW

Power
Recommended:110 kW

Job Commitment:

Existing:60jobs

New:46 jobs

New Jobs/Power Ratio:418 jobs/MW

New Jobs -

Avg. Wage and Benefits:$47,000

Capital Investment:$2.0
million

Capital Investment per MW: $18.2 million/MW

Summary: This expansion project will help the company expand
its manufacture of products used in road construction, parking lot expansions
and home and building materials markets. The availability of low-cost power is
essential to the economics and competitiveness of this project.It will help the company compete and be able
to grow in western New York.
This expansion will also have a positive effect on work produced at the
company’s other western New York
sites.

Project Description:The
project would include the purchase and renovation of a building in North Tonawanda. The
company will install new and reconditioned state-of-the-art tire recapping
equipment. The new equipment would include buffers, extruders, tire painters,
air compressors, new lighting and other equipment associated with tire
recapping. In addition, the company will modify and upgrade its warehouse.

Existing Allocation:None

Power Request:232 kW

Power
Recommended:180 kW

Job Commitment:

Existing:3jobs

New:15 jobs

New Jobs/Power Ratio:83 jobs/MW

New Jobs -

Avg. Wage and Benefits:$29,000

Capital Investment:$1.1
million

Capital Investment per MW: $6.1million/MW

Summary: The availability of low-cost power is
essential to the economics and competitiveness of this project. The company
would be competing with tire recappers in other states, as well as foreign tire
manufacturers. The company is also considering alternative locations for this
project in Bradford and Erie,
Pennsylvania. A low-cost power
allocation would help Hurtubise build its case to locate this new business in
western New York.NiagaraCounty will assist the
company with a $200,000 loan and it has qualified for real property tax
exemptions on its building improvements.

Project Description:The
project includes the purchase of a building and an expansion of approximately
23,000 square feet. All new equipment will be installed for the manufacturing,
handling, banding, tagging and loading of the company’s product. In addition,
new computer hardware and software for order entry, costing, scheduling,
accounting, inventory, purchasing and billing will be installed.

Existing Allocation:None

Power Request:1,000 kW

Power
Recommended:1,000 kW

Job Commitment:

Existing:0jobs

New:64 jobs

New Jobs/Power Ratio:64 jobs/MW

New Jobs -

Avg. Wage and Benefits:$35,000

Capital Investment:$12.5
million

Capital Investment per MW: $12.5 million/MW

Summary: Niagara Sheets was formed in 2007 to produce
corrugated fiberboard sheets used in manufacturing boxes. The company is a
joint venture owned by Jamestown Container Corp., Smurfit- Stone Container
Enterprises and Norampac Industries, Inc. The availability of low-cost power is
essential to the economics and competitiveness of this project, which will
supply cardboard sheets for Norampac’s Lancaster
factory and other customers. The company is in the process of working with
local and state economic development agencies to apply for various project
incentives.

The
President and Chief Executive Officer submitted the following report:

Summary

“The Trustees are requested to
approve extensions to the terms of service for nine allocations of Expansion
Power (‘EP’) totaling 11,100 kW to the nine companies listed in Exhibit ‘7-A,’
all of which are existing customers.In
addition, the Trustees are requested to approve a reduction in the allocation
and job commitments of one of the customers as detailed below.

BACKGROUND

“Under Section 1005(13) of the
Power Authority Act, the Authority may contract to allocate or reallocate
directly, or by sale for resale, 250 MW of firm hydroelectric power as EP to
businesses within the state that are located within 30 miles of the Niagara
Power Project (‘Project’), provided that the amount of power allocated to
businesses in Chautauqua County on January 1, 1987 (19,732 kW) continues to be
allocated in such county.

“Each application for an EP allocation
must be evaluated under criteria that include, but need not be limited to,
those set forth in Public Authorities Law Section 1005(13)(a), which sets forth
eligibility criteria, and (b), which sets forth revitalization criteria.

DISCUSSION

3M Company (‘3M’)

“3M’s Tonawanda
facility, located in ErieCounty, is part of 3M’s
Home Products Division.The plant has
been in existence for approximately 52 years.The main products manufactured at this site are cellulose sponges and
sponge abrasive laminate sponges.Over
the years, the company has spent large amounts of capital on both production
machinery and infrastructure projects at this site.The company’s manufacturing process uses a
large amount of electricity that adds a significant cost to production
expenses.

“The manufacturing operations at
this site are significantly more affected by electric rate structure than other
3M sites due to the process design.Cellulose sponge is cooked with electricity to create the final product.Energy cost is a significant factor when
expansion projects are considered.Ultimately, the continuation of lower-cost electricity will stabilize
the company’s job base through reduced plant operating costs.Cost-effective production capacity can then
be leveraged to increase market share.

“In the last 18 months, 125
engineering projects costing approximately $10 million were completed at the
plant.The plant undergoes an annual
capital forecasting process that targets further investment in plant efficiency,
occupational safety and health systems and technology, manufacturing capacity
and site infrastructure.

“The EP contract extension is
considered a necessity from 3M’s perspective to maintain a favorable
manufacturing position for its facility in western New York.With low-cost EP, the company can stabilize and/or reduce its
electricity costs and help secure the facility’s future.3M’s 500 kW EP allocation terminated on June
30, 2007.Since then, the Authority has
been serving 3M on a month-to-month basis.

“Staff recommends that the Trustees
approve an extension of the term of service for the 500 kW allocation for five
years.3M has been above its job
commitment and will commit to maintaining its current employment level of 330
jobs.

C&S Wholesale
Grocers Inc. (‘C&S’)

“C&S,
located in Cheektowaga, ErieCounty, has been
providing warehousing and distribution services to supermarket chains,
independent grocers and military facilities across the nation for more than 85
years.C&S entered western New York in 2002 when it entered an agreement with Tops
Markets to purchase its distribution facilities in Lancaster,
New York, Cheektowaga,
New York and Cleveland, Ohio.C&S currently supplies Tops Markets,
Martins’ and other local grocery stores from these three locations.

“C&S
is dedicated to the EmpireState.In addition to its western New
York presence, C&S also operates more than 1.5 million square
feet of warehouse space on Long Island and in the HudsonValley.Statewide, the company employs more than 1,600
workers.

“Unlike some types of facilities,
frozen-food warehouses have to maintain operations regardless of sales.The Cheektowaga
facility must keep products at temperatures as low as 15 degrees below
zero.The company maintains a fleet of
electric forklifts to keep products moving onto their shelves from suppliers’
freezer trucks and from their shelves onto their grocery customers’ waiting
trucks.The battery chargers for these
forklifts are in constant operation.This keeps the C&S’s electric demand and consumption constantly high
around the clock and throughout the year.After lease and property tax expenses, electricity is the highest
occupancy expense at the facility.Electricity costs account for approximately 20% of the freezer’s
occupancy costs.

“C&S
has 45 full-time-equivalent employees at this location.The company’s goal, as it rebuilds shipment
volumes at this location is to bring full-time staffing levels to between 50
and 55 employees.

“The
contract for C&S’s 300 kW allocation of EP, with a commitment of 50 jobs,
at its Cheektowaga facility expired on January
31, 2006.Since then, the Authority has
been serving C&S on a month-to-month basis.

“Staff
recommends that the Trustees approve an extension of the term of service for the
300 kW allocation for five years with an employment commitment of 50 jobs.

Delphi Automotive
Systems (Amherst) (‘Delphi’)

“Delphi produces plastic molded
components, primarily radiator tanks, for the automotive industry at its
facility in Amherst, ErieCounty.On October 8, 2005, Delphi
filed voluntary petitions for business reorganization under Chapter 11 of the
U. S. Bankruptcy Code.Delphi took this
action to preserve the value of the company and complete the transformation
plan designed to resolve its existing legacy issues and the resulting high cost
structure of its U. S.
operations.As this reorganization
process continues, the U. S. Delphi plants, offices and other facilities will
continue to operate, including the Amherst
injection molding facility.

“As
part of the transformation plan, Delphi must
realign its global product portfolio and manufacturing footprint to preserve
the core business.Each individual Delphi plant site will be evaluated within the next
several months as to the successful progress to its revitalization plan, and
the future viability of its site.

“To remain viable, the Delphi
Amherst Injection Molding facility must continue to meet its commitments with
respect to cost.The extension of the
company’s contract for 500 kW of EP for 124 jobs will help Delphi
maintain costs and is vital for the company to remain in business.

“Delphi’s
current EP allocation has had a direct impact on lowering its overhead costs,
enabling the company to competitively quote on new business with positive
results.In the last few years, Delphi has been awarded new business and existing
business that was running in other molding shops throughout the country.Booking this business allowed Delphi to add equipment to the facility.Delphi is competing
in a global market and it is a challenge to stay competitive.It has become critical to have avenues to
offset rising operational costs.The EP
allocation is one of these avenues.Currently, approximately 90% of the product manufactured at the Amherst site feeds the assembly lines at Delphi’s
Lockport Facility.

“In 2005 and 2006, a new Cure in
Place Gasket (‘CIPG’) Line and four plastic injection molding machines that
cost $1.8 million were added to the operation.In 2006, new pallets that cost $60,000 were purchased for the CIPG Line;
these pallets reduce scrap and improve productivity levels.

“Delphi
has been meeting its contractual commitments, but its contract for its EP
allocation terminated on September 30, 2006.Since then, the Authority has been serving Delphi
on a month-to-month basis.

“Staff recommends that the Trustees
approve an extension of the term of service for the 500 kW allocation for five
years with an employment commitment of 124 jobs.

Dunkirk Specialty Steel, LLC (‘DSS’)

“DSS is
a wholly owned subsidiary of Universal Stainless & Alloy Products, Inc. (‘USAP’).The company is located in Dunkirk,
ChautauquaCounty.DSS manufactures round and shaped bars, coiled rods and wire products
from specialty stainless steel billets produced by USAP in Bridgeville, PA.At present, DSS is producing and delivering
nearly 1.7 million pounds of these products to various customers each month;
that total is increasing year by year.These products serve a variety of end-markets, such as petrochemical,
mining, aerospace, nuclear and power generation, medical, transportation,
marine and machine building.

“Domestic
manufacturers of stainless steel products face significant challenges,
especially due to foreign competition.At the Dunkirk
facility, electrical costs as a percentage of operational/production costs
averaged 10% over the past five years.DSS’s present EP allocation gives the company the ability to combat
foreign producers’ cost advantages.

“DSS’s EP allocation is essential
for business growth and an integral part of existing plans to modernize its hot
rolling technology.Building
improvements at the site are ongoing to prepare for a new production line
start-up in January 2008.This
investment totals nearly $4 million in equipment alone and will increase bar
production capacity by 15-20%, requiring the hiring of several new
employees.The company is actively
recruiting in all departments, with the goal of reaching 180 jobs by the end of
2007.

“The contract for DSS’s 6,800 kW EP
allocation for 250 jobs expired on December 31, 2006.Since then, the Authority has been serving
DSS on a month-to-month basis.The
company has never fully utilized its allocation, peaking at slightly more than
5,900 kW in early 2006.

“Staff
recommends that the Trustees reduce the allocation to 5,800 kW, lower DSS’s
employment commitment to 180 and approve an extension of the term of service
for the 5,800 kW allocation for five years.

Fairbank
Reconstruction Corp. d/b/a Fairbank Farms (‘Fairbank’)

“Fairbank
is a medium-sized USDA-inspected ground beef processing facility located in
Ashville, ChautauquaCounty.This food-processing business remains the
only locally owned and operated ground beef facility serving the retail
supermarket trade in the Northeast.The
business survived a devastating fire in 1989 and with the assistance of the
Authority, and the determination of the Fairbank family, has developed into one
of the industry-leading suppliers of modified-atmosphere packaged fresh ground
beef and ground beef patty products.Fairbank’s annual new equipment expenditures have averaged more than
$800,000 a year since 2003.The company
plans to add a new product storage freezer and associated dock space to the
facility in fall 2008 at an estimated cost of $1.2 million.

“Today, Fairbank produces
approximately 1.1 million pounds per week of fresh case-ready ground beef in
modified-atmosphere packaging and ground beef chubs for sale to retail
distributors and their stores.The
company’s sales efforts are geared to adding new customers to fill the capacity
created during its last expansion.Fairbank’s sales have increased 24% in 2007 and are expected to increase
in 2008-09 by an additional 25%, which would move total volume to 1.6 million
pounds/week.The increase in employment
from 2006 to 2009 will be in excess of 40 full-time positions.Fairbank’s EP allocation significantly helps
the company’s competitive edge.Without
the allocation, jobs would have to be redirected to another company facility.Since 1990 (following the plant fire), the
company’s workforce has grown from 30 to an annual average of 110
employees.

“Fairbank’
contract for a 700 kW EP allocation with a commitment of 100 jobs at its
Ashville facility expired on November 20, 2005.Since then, the Authority has been serving Fairbank on a month-to-month
basis.

“Staff
recommends that the Trustees approve an extension of the term of service for
the 700 kW allocation for five years with an employment commitment of 110 jobs.

International
Imaging Materials, Inc (‘IIMAK’)

“IIMAK, an international business
based in Amherst, ErieCounty,
manufactures thermal transfer ribbons and associated products for the printing
industry.In addition, the company
manufactures and distributes glass imaging products, contract inks and coatings
and distributes other printing supplies.The Amherst
site includes corporate offices for executive management, sales, marketing and
finance, as well facilities for direct manufacturing and distribution of
IIMAK’s products.

“The company continues to explore
ways to expand its business to new markets, either as a contract manufacturer
or new product developer, and anticipates future acquisitions to help
facilitate its growth, which will result in new jobs in Amherst.IIMAK continues to invest in its business to remain competitive and
expand into new markets.The facility
has remained state of the art through capital investment over the last 10
years.The company has spent more than
$15 million on capital investment since 2001.IIMAK recently expanded into the glass decorating market and has
modified parts of its plant for this business unit.To date, the company has spent $600,000 on
clean rooms and equipment such as printers, laminators and tempering ovens to
support this new business.

“IIMAK’s marketplace is highly
competitive.Low-cost power is essential
to the company’s operation being cost effective.Hydropower has allowed IIMAK to effectively
automate and update its equipment and to stay competitive and remain in New York.Without its EP allocation, the company’s
automation projects would not be cost effective.IIMAK continues to look for growth
opportunities in related manufacturing areas with a goal of bringing increased
production to Amherst
to take advantage of the company’s core business knowledge and manufacturing
capability.EP is critical to this
cause.The company currently employs 393
people.

“The contract for IIMAK’s 1,250 kW
EP allocation for 380 jobs expired on June 30, 2007.Since then, the Authority has been serving
IIMAK on a month- to-month basis.

“Staff
recommends that the Trustees approve an extension of the term of service for
the 1,250 kW allocation for five years with an employment commitment of 393
jobs.

Special Metals
Corporation (‘SMC’)

“SMC, founded
in 1952, is a world leader in super-alloy technology located in Dunkirk, ChautauquaCounty.The company pioneered the vacuum induction
melting method to produce super-alloys for military and civilian use in jet
engine turbines.Nearly every jet engine
in the free world has some alloy in it produced by SMC.Due to the
recession in the aerospace industry and the collapse of Enron, SMC went into
bankruptcy in 2002, significantly dropping its employment level.Since then, the company has restructured and
emerged from bankruptcy at the end of 2003.The industry has improved and SMC has dramatically recovered lost
business.In 2005, Precision Castparts
Corporation (‘PCC’) acquired SMC with plans to increase investment and
employment at the facility.

“SMC
recently completed a significant expansion project.The company spent approximately $35 million
to install a GFM Rotary Forge Press.The
equipment itself cost about $27 million, and the building expansion to
accommodate the equipment cost an additional $8 million.This investment is expected to double SMC’s
forging capacity and improve material yield by 5%.The new capital investment should enable the
company to increase market share in the high-tech metals alloying business and
provide a measure of job security for employees at the company’s Dunkirk and New Hartford,
New York facilities.

“The
aerospace market is increasingly competitive.The engine manufacturers that use SMC’s alloys continuously demand
lower-cost products to ensure their own viability.Electricity represents about 14% of SMC’s
total variable cost at the Dunkirk
site.SMC’s management believes that its
EP allocation has been an important factor in enabling the company to
competitively price its products in the marketplace.An extension of the EP contract will be key
in enabling SMC to stay competitive with other specialty alloy manufacturers.

“The contract for SMC’s 1,000 kW EP
allocation for 81 jobs expired on February 28, 2007.Since then, the Authority has been serving
the company on a month-to-month basis.

“Staff
recommends that the Trustees approve an extension of the term of service for
the 1,000 kW allocation for five years with an employment commitment of 81
jobs.

The Red Wing
Company (‘Red Wing’)

“Production operations began for
Red Wing at its site in Fredonia, ChautauquaCounty, in the early
1900s when fruit juices produced from local crops were packaged and marketed
under the ‘Red Wing’ label.In the late
1920s and early 1930s, ketchup and jam and jelly production were added.Presently, the company operates four
distinct production departments:Peanut
Butter, Preserves and Jelly, Tomato and Salad Dressing.Within these departments are 10 production
lines that produce a broad variety of products:peanut butter, jelly, preserves, spaghetti sauce, salsa, chili sauce,
cocktail sauce, barbeque sauce, mayonnaise, pourable salad dressing, pancake
syrup, chocolate syrup, marinade and Bloody Mary mixes.

“The full-time staffing level is
currently at 637, with 155 administrative employees and 482 hourly
employees.The average wage is
approximately $18 per hour, plus 43% added on for benefit costs.

“Red Wing’s parent company,
Ralcorp, has spent more than $20 million on capital invested in the Fredonia
facility over the last six years, primarily to improve productivity in an
effort to maximize output with available resources.Several million dollars have been spent
during this time on building infrastructure projects, namely, replacing and
repairing roofing and floor systems throughout the facility.

“The current EP allocation has
helped the company keep variable overhead spending at reasonable levels in the
midst of significant price increases over the last several years.This is especially true with respect to
utility costs and packaging material (plastic) costs, as the oil and natural
gas markets have driven other prices higher, namely electricity.

“Continued availability of this
allocation is vital to Red Wing’s maintaining market share, since the company
must remain at par with competing companies in other states that benefit from
lower utility costs.Recently, a study
conducted by an international energy management company for Ralcorp found that
Red Wing is paying nearly two-thirds more in electrical demand charges for the New York facilities than
the 10 biggest electrical users throughout Ralcorp’s various other
divisions.The manufacturing sites
continue to compete for production volume within the company.Red Wing’s EP allocation helps offset the
disparity in demand charges and thus will help keep production volume at the
Fredonia site, keeping jobs in western New
York.Current
employment is 510 jobs.

“The contract for Red Wing’s 750 kW
EP allocation for 440 jobs at its Dunkirk
facility expired on May 31, 2007.Since
then, the Authority has been serving the company on a month-to-month basis.

“Staff recommends that the Trustees
approve an extension of the term of service for the 750 kW EP allocation for five
years with an employment commitment of 440 jobs.

Tulip Corporation
(‘Tulip’)

“Tulip,
located in Niagara Falls, NiagaraCounty,
has been in operation since the turn of the last century.The company was part of the Prestolite
Battery family until 1985, when Tulip purchased the facility.The plant has a long history of manufacturing
automotive battery cases, covers and safety vents.Today it is Tulip’s core business, but Tulip
has also expanded into manufacturing recycled polypropylene and polyethylene
materials that are both used internally to manufacture new battery components
out of 100% recycled materials and sold to various outside customers.Tulip plans to invest at least another $1
million over the next 2-5 years to grow its business further.

“The
expansion into manufacturing with recycled materials has increased Tulip’s
demand for electricity significantly.Currently electric costs represent 28.2% of the company’s material sales
cost and 7.2% of its battery component sales cost.Therefore, Tulip’s EP allocation is vital to
its operation.

“The
contract for Tulip’s 300 kW EP allocation for 122 jobs at its Niagara Falls facility expired on October 31,
2005.Since then, the Authority has been
serving Tulip on a month-to- month basis.With the new product expansion that will occur over the next 2-4 years,
Tulip can commit to an employment level of 110 employees.

“Staff
recommends that the Trustees approve an extension of the term of service for
the 300 kW allocation for five years.

“The extensions requested above
will help maintain costs and enable these nine companies to compete more
effectively.In addition, they will
further secure employment levels in Western New York.

“The
request was reviewed in accordance with the applicable criteria set forth in
Part 460 of the Authority’s Rules and Regulations governing the Allocation of
Industrial Power (21 NYCRR Part 460 (1988)).

RECOMMENDATION

“The Director – Business Power
Allocations, Compliance and Municipal and Cooperative Marketing recommends that
the Trustees approve extensions to the terms of service for nine allocations of
Expansion Power totaling 11,100 kW to the nine companies listed in Exhibit ‘6-A’
and approve a reduction in the allocation and jobs commitment for one of the customers
as detailed above.

“The Executive Vice President,
General Counsel and Chief of Staff, the Senior Vice President – Marketing and
Economic Development and I concur in the recommendation.”

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

RESOLVED, That the
Trustees find that staff’s review supports an extension of 11,100 kW of
Expansion Power as detailed in Exhibit “A,” that is hereby approved on the
terms set forth in the foregoing report of the President and Chief Executive
Officer; and be it further

RESOLVED, That the
Trustees approve a reduction in the allocation and jobs commitment for Dunkirk
Specialty Steel, LLC as described in the foregoing report of the President and
Chief Executive Officer; and be it further

RESOLVED, That the Senior Vice President – Marketing and Economic Development,
or his designee, be, and hereby is, authorized to negotiate and execute any and
all documents necessary or desirable to effectuate the foregoing, subject to
the approval of the form thereof by the Executive Vice President, General
Counsel and Chief of Staff; and be it further

RESOLVED, That the Chairman, the President and Chief
Executive Officer and all other officers of the Authority are, and each of them
hereby is, authorized on behalf of the Authority to do any and all things and
take any and all actions and execute and deliver any and all agreements,
certificates and other documents to effectuate the foregoing resolution,
subject to the approval of the form thereof by the Executive Vice President,
General Counsel and Chief of Staff.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The
Trustees are requested to approve the transfer of power allocations for six
existing customers that have either changed their names for various business
reasons and/or moved the location of their business.

BACKGROUND

“Three companies have requested
that the Authority grant approval of their requests for the continued delivery
of Authority power allocations to facilities that have all gained prior
approval for an allocation with pre-existing company names and/or ownership.The present owners of these same facilities
are now requesting that the Authority authorize the continuation of the power
allocations granted to the previous company names and ownership associated with
these facilities.One company requested
that the Authority grant approval of its request to transfer its allocation to
a company that has agreed to maintain the current business operation and commit
to the existing terms of the contract; however, the new owners are changing the
company name.Two companies requested
that the Authority grant approval of their request to transfer their
allocations to another facility.The
reasons for such transfers are described below.

“The
Trustees have approved transfers of this nature at past meetings.

DISCUSSION

“The
proposed transferees are as follows:

“Alcan Packaging Food & Tobacco Inc. (‘Alcan’), located in New
Hyde Park, Nassau County, has been in business for more than 60 years.Alcan manufactures flexible plastic packaging
primarily used in the food industry.The company, originally Cellu-Craft Inc.,
was awarded an 850 kW Economic Development Power (‘EDP’) allocation for 141
jobs by the Trustees at their meeting of January 23, 1991.At their September 23, 2003 meeting, the
Trustees recognized the company’s name change from Lawson Marden Label, Inc. to
the legal name of its parent company, Alcan Packaging Food & Tobacco
Inc.At their September 30, 2005
meeting, the Trustees extended the allocation to the end of 2006 and granted
the company Energy Cost Savings Benefits (‘ECSBs’) for the same period in
exchange for 175 jobs.At their November
28, 2006 meeting, the Trustees extended the allocation from January 1, 2007
through June 30, 2007 and granted the company ECSBs for the same period in
exchange for 170 jobs.At their June 26,
2007 meeting, the Trustees extended the allocation through June 30, 2008 and
granted the company ECSBs for the same period in exchange for 163 jobs.Alcan has moved most of its manufacturing to
a modern facility in Edgewood, Long Island
that can handle the 10 new color printing presses and slitters required for its
customers.Alcan requests that the 850
kW EDP allocation be transferred to its Edgewood
facility, where the company will continue tohonorall of the terms and
commitments of its contract with the Authority.

“The NewYork chapter of the American Cancer Society (‘ACS’),
formerly located on West 56th
Street in Manhattan,
New York County, moved its office
to West 32nd Street
in August 2007.The New York chapter is part of the nationwide
community-based not-for-profit organization dedicated to eliminating cancer as
a major health problem through prevention and diminishing suffering through
research, education, advocacy and services such as counseling, doctor referral
and home care assistance.ACS was awarded
a 100 kW Power for Jobs (‘PFJ’) allocation with 113 jobs by the Trustees at
their April 28, 1998 Trustees meeting.The contract was extended, with 99 jobs, by the Trustees at their April
17, 2001 Trustees meeting.ACS chose to
take the rebate option in 2005, and was approved for 100 kW and 114 jobs
through the end of 2006, by the Trustees at their November 29, 2005
meeting.ACS continued with the rebate
for January 1, 2007 through June 30, 2007, with 80 kW and 83 jobs, as approved
by the Trustees at their meeting of November 28, 2006.The rebate option has been extended through
June 30, 2008, with 80 kW and 91 jobs, as approved by the Trustees at their
meeting of June 26, 2007.ACS requests
that the PFJ rebate benefit be transferred to its West 32nd Street office, where
ACS agrees to comply with all obligations associated with its allocation.

“Ferro Electronic Materials Inc. (‘Ferro’), located in Niagara
Falls, Niagara County, since 1906, is the premier supplier of ceramic
dielectric powders used to make capacitors used by both the military and
commercial electronics industries.Furthermore, Ferro is a worldwide supplier of zircon, zirconia and
rutile base ceramics used in tiles and high-performance refractories.TAM Ceramics, Inc. (‘TAM’) was awarded four
hydro allocations, one Expansion Power (‘EP’) and three Replacement Power (‘RP’),
from the early 1960s through the 1990s.The oldest allocation is a 7 MW RP allocation with 147 jobs.Then TAM received a 3 MW EP allocation with
224 jobs, an RP allocation of 1MW with 257 jobs and finally an RP allocation of
3,115 kW with 306 jobs.At their
September 30, 1997 meeting, the Trustees reduced the employment commitments for
the 3MW EP allocation and 3,115 kW RP allocation for productivity improvements
made to 220 jobs and 302 jobs, respectively.Ferro purchased TAM in 1999 and the Trustees transferred the EP
allocation (RP allocations contractually do not require permission for transfer
if substantially all the assets were sold) to Ferro at their October 26, 1999
meeting.At their September 26, 2000
meeting, the Trustees reduced the 3,115 RP allocation’s employment level for
productivity improvements to 276 jobs.At their April 24, 2007 meeting, the Trustees reduced the 3MW EP
allocation, the 3,115 kW RP allocation and the 1MW RP allocation due to Ferro’s
not meeting employment commitments to 2,100 kW, 1,700 kW and 600 kW,
respectively, with a revised employment commitment of 152 jobs.Ferro is in the process of selling all its
assets at its Niagara Falls
location to All-American Holdings, LLC and/or its affiliates (‘AAH’).AAH plans to operate the same business for
the long term and has plans to grow.AAH
will hold the business as a newly formed LLC and plans to change the name of
the newly formed company back to TAM Ceramics.AAH will honor all existing contract terms and conditions stated in the
Ferro contracts, with plans to build up the company over the next three years
to meet the employment thresholds in those contracts.Ferro requests that the Trustees transfer its
hydro allocations from the Niagara facility to
AAH.

“Homogenous Metals Inc. (‘Homogenous Metals’), located in Clayville,
OneidaCounty, is a wholly owned subsidiary of
United Technologies Corporation.Homogenous Metals was founded in the mid-1960s.The company manufactures super alloy metal
powders used in military and commercial aircraft engines, in addition to the
space shuttle engines.The company is changing
its name only, without any ownership change, to HMI Metal Powders.The Trustees approved 500 kW PFJ allocation
with 109 jobs at their January 27, 1998 meeting.The allocation was extended, with 518 jobs,
by the Trustees at their meeting on January 30, 2001.At their February 23, 2005 meeting, the
Trustees extended the allocation, with 108 jobs, through December 31,
2005.At their September 20, 2005
meeting, the Trustees extended the allocation, with 109 jobs, through December
31, 2006.At their October 24, 2006
meeting, the Trustees extended the allocation was extended through June 30,
2007.At their June 26, 2007 meeting,
the Trustees extended the allocation, with 106 jobs, through June 30,
2008.The company requests that the
Trustees approve its name change for contractual purposes.

“Orion Bus Industries, Inc. (‘Orion’) located in Oriskany, OneidaCounty,
has been in business since 1982, and manufactures heavy-duty state-of-the-art
transit buses.The Trustees approved the
company for a 700 kW EDP allocation with 463 jobs at their August 28, 1990
meeting.At their September 28, 1998
meeting, the Trustees approved a 300 kW PFJ allocation with 775 jobs.At their April 27, 1999 meeting, the Trustees
adjusted the PFJ allocation employment commitment to 644 jobs.The Trustees extended the PFJ allocation at
their April 17, 2001 meeting.At their
February 23, 2005 meeting, the Trustees extended the PFJ allocation, with 596
jobs, through December 31, 2005.The
Trustees extended the PFJ allocation, with 250 kW and 508 jobs, through
December 31, 2006 at their meeting on September 20, 2005.At their meeting of January 31, 2006, the
Trustees reinstated the PFJ allocation to 300 kW.The Trustees extended the PFJ allocation,
with 523 jobs, through June 30, 2007 at their November 28, 2006 meeting and
then extended it through June 30, 2008, with 571 jobs, at their June 26, 2007
meeting.The EDP allocation was extended
through December 31, 2006 by the Trustees at their September 20, 2005 meeting
and Orion was granted ECSBs for this period, with an employment commitment of
507 jobs.The EDP allocation was
extended through June 30, 2007, with ECSBs, by the Trustees at their November
28, 2006 meeting, with 523 jobs.At
their June 26, 2007 meeting, the Trustees extended the EDP allocation through
June 30, 2008 with ECSBs, with 571 jobs.The company requests that the Trustees change their name for contractual
purposes to DaimlerChrysler Commercial Buses North America Inc.The company changed its name only, without
any ownership change, in September 2006.

“Silver Eagle Technology Inc. (‘Silver Eagle’) located in North Tonawanda, NiagaraCounty, started in Pennsylvania in 2003.The company recovers tungsten carbide and
cobalt raw materials from used carbide tools and worn parts.The powders produced are then reused by the
carbide manufacturers.The Trustees
approved a 600 kW RP allocation at their meeting on September 26, 2006 in
return for a commitment to create 15 jobs.Silver Eagle has not taken its allocation down yet.The company wanted to have a New York corporation run the business instead of a Pennsylvania corporation, so it established a New York corporation
called Bestung Carbide, Inc.The
ownership has not changed.The company will honor all commitments
associated with its RP allocation.Silver Eagle requests that the Trustees transfer the allocation to the
new corporation.

RECOMMENDATION

“The Director – Business Power
Allocations, Compliance and Municipal and Cooperative Marketing recommends that
the Trustees approve the transfer of power allocations for three existing
customers that have changed their names or transferred their allocations for
various business reasons, approve the transfer of two customers’ existing
allocations to their new facilities and approve the transfer of one customer’s
allocations to a company that has agreed to maintain the current business
operation and commit to the existing terms of the contracts, although the new
owner is changing the company name.

“The Executive Vice President,
General Counsel and Chief of Staff, the Senior Vice President – Marketing and
Economic Development and I concur in the recommendation.”

The following resolution, as submitted by the
President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That
the Authority hereby authorizes the transfers of six industrial power
allocations in accordance with the terms described in the foregoing report of
the President and Chief Executive Officer; and be it further

RESOLVED, That
the Chairman, the President and Chief Executive Officer and all other officers of
the Authority are, and each of them hereby is, authorized on behalf of the
Authority to do any and all things, take any and all actions and execute and
deliver any and all agreements, certificates and other documents to effectuate
the foregoing resolution, subject to the approval of the form thereof by the
Executive Vice President, General Counsel and Chief of Staff.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The
Trustees are requested to approve amendments to the Authority’s tariffs for
Economic Development Power (‘EDP’), High Load Factor (‘HLF’) and Industrial
Economic Development served by Municipal Distribution Agencies (‘IED/MDA’)
(collectively, the ‘Power Programs’) to increase rates for certain of the Power
Program customers that have been recently authorized by the Trustees to receive
Energy Cost Savings Benefit Awards (‘ECSB Awards’).These customers have long-term price
commitments that expire on October 31, 2007.This action is necessary to be in compliance with legislation passed in
June 2007 that extends the ECSB Awards to these customers.In the absence of this legislation, they
would be billed at market supply costs as of November 1, 2007.The proposed rates reflect the increased
costs incurred by the Authority to serve these Power Program customers,
partially offset by receipt of such ECSB Awards.

BACKGROUND

“In June 2007, the Legislature
passed the second extension of the ECSB Awards.The amendment was signed into law by the Governor on June 29, 2007.The legislation extended the ECSB Awards
expiration date from June 30, 2007 to June 30, 2008.ECSB-eligible customers are those whose power
prices may be subject to increase before June 30, 2008.

“At their June 26, 2007 meeting,
the Trustees took steps to implement the 2007 amendment to the Public
Authorities Law.Specifically, the
Trustees approved contract extensions for 66 Power Program customers to June
30, 2008; these customers’ contracts were to have expired before that
date.Second, the Trustees approved the
Economic Development Power Allocation Board (‘EDPAB’) recommendation that all
Power Program customers be approved for ECSB benefits, subject to subsequent
verification.Finally, that agenda item
noted that those customers with price protection expiring on October 31, 2007
would be subject to an 11.3% delivered rate increase effective November 1, 2007
(the subject of today’s item) consistent with the October 19, 2005 Trustees’
action that approved an 11.3% delivered rate increase for the initial ECSB
recipients.

DISCUSSION

“At their July 31, 2007 meeting, the Trustees authorized
the Corporate Secretary to file a Notice of Proposed Rulemaking of the
Authority’s proposed action to amend the tariffs with the New York State
Department of State for publication in the New
York State Register.On August 14,
2007, the customers newly eligible for ECSB awards were provided written notice
of both the proposed rates and a public forum on September 18, 2007 in the
Authority’s White Plains
office.On August 15, 2007, the Notice
of Proposed Rulemaking and a notice concerning the public forum were published
in the State Register.At the September 18th public
forum, no party made any comments on the record.In addition, no written comments were
received during the statutory comment period, which expired on Monday, October
1, 2007.

“Exhibit
‘9-A’ shows the rates for the newly approved ECSB customers that have pricing
protection ending October 31, 2007.These rates will be effective November 1, 2007 through June 30,
2008.The applicable tariffs are: ST-1,
ST-1S, ST-35 and ST-50.In the absence
of either another program extension or the implementation of a permanent power
program, customers that have contracts beyond June 30, 2008 will be subject to
market-based supply costs beginning July 1, 2008.

“Since
the beginning of the ECSB Awards, Authority staff has monitored the negative
differential between the costs to the Authority for purchased power to supply
the customers and customer revenues at the ECSB rates.These customer-related costs and the
offsetting hydro revenues have been periodically reported to senior
management.From the inception of the
ECSB Awards in November 2005 through July 2007, customer-related costs have
been $37.4 million.This is offset by
$44.6 million of hydro revenues, bringing the total net to a positive $7.2
million.With the addition of 32 new
customers with ECSB Awards, customer-related costs will increase, while the
source of hydro revenues will remain constant.Staff will continue to track and report the net results and anticipates
that future withdrawals of monies from the Operating Fund may be required for
the payment of such awards.The
withdrawals should be made provided that such monies are not needed for any of
the purposes specified in Section 503(1)(a)-(c) of the General Resolution
Authorizing Revenue Obligations.

FISCAL INFORMATION

“The
11.3% rate increase effective November 1, 2007 is expected to produce an
estimated $3.7 million for the eight-month period through June 30, 2008.The total cost to the Authority for the same
period is estimated to be $5.4 million.

“The
Manager - Market and Pricing Analysis further recommends that the Corporate
Secretary be authorized to publish a Notice of Adoption of this action in the New York State Register.

“The
Executive Vice President, General Counsel and Chief of Staff, the Executive
Vice President and Chief Financial Officer, the Senior Vice President –
Marketing and Economic Development and I concur in the recommendations.”

Marilyn
Brown presented the highlights of staff’s recommendations to the Trustees.In response to a question from Chairman
McCullough, Ms. Brown said that the Authority will be absorbing $1.7 million in
costs as a result of these service tariff amendments.

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

WHEREAS, on July 31, 2007, the Trustees authorized the Corporate
Secretary to file a Notice of Proposed Rulemaking to amend certain tariffs to
increase total rates by 11.3% effective November 1, 2007 and approve funding of
the Energy Cost Savings Benefit (“ECSB”) Awards in order to offset the cost of
electrical commodity supply incurred for serving customers of the Authority’s
Economic Development Power, High Load Factor and Industrial Economic
Development programs; and

WHEREAS, such notice was duly
published in the New York State Register
on August 15, 2007 and more than 45 days have elapsed since such publication;
and

WHEREAS, no public comments were
received at the public forum held on September 18, 2007 and no written comments
in response to the proposed action have been received by the Authority;

NOW THEREFORE BE IT RESOLVED,
That the proposed tariff amendments be increased, based on total delivered
rates, by 11.3%, effective November 1, 2007, subject to the availability of
funds in the ECSB Awards; and be it further

RESOLVED, That the Senior Vice President – Marketing and Economic
Developmentor his designee be, and hereby
is, authorized to take such other and further actions as may be necessary to
effectuate the foregoing; and be it further

RESOLVED, That the Corporate
Secretary of the Authority be, and hereby is, authorized to file a Notice of
Adoption of this action with the Department of State for publication in the New York State Register; and be it
further

RESOLVED, That the Chairman, the
President and Chief Executive Officer and all other officers of the Authority
are, and each of them hereby is, authorized on behalf of the Authority to do
any and all things and take any and all actions and execute and deliver any and
all agreements, certificates and other documents to effectuate the foregoing
resolution, subject to the approval of the form thereof by the Executive Vice
President, General Counsel and Chief of Staff.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The
Trustees are requested to take final action to approvethe consolidation of the Authority’s current
production and delivery service tariffs applicable to New York City
Governmental Customers and Westchester County Governmental Customers
(collectively, ‘Governmental Customers’) into two consolidated single tariffs
(each a ‘Single Tariff’ and collectively ‘Single Tariffs’).One Single Tariff (attached as Exhibit ‘10-A’)
would be for the New York City Governmental Customers and the other (attached
as Exhibit ‘10-B’) would be for the Westchester County Governmental Customers.

BACKGROUND

“At
their June 26, 2007 meeting, the Trustees directed the Corporate Secretary to
file a Notice of Proposed Rulemaking (‘NOPR’) with the New York State
Department of State for publication in the New
YorkState Register that the
Authority proposed to consolidate the Authority’s current production and delivery
service tariffs into two Single Tariffs.The NOPR was published in the New
York State Register on July 11, 2007.The public comment period closed on August 27, 2007, in accordance with
the State Administrative Procedure Act (‘SAPA’).In addition, all governmental customers were
notified of the proposed Single Tariffs and invited to review and submit
comments.

DISCUSSION

“The
City of New York (‘City’) filed formal written comments in accordance with
SAPA, which are attached as Exhibit ‘C.’No other comments were received.Staff has reviewed the City’s written comments and has substantially
accepted their recommendations.Staff’s
recommendations will be incorporated into the Single Tariffs.

“Following
is a summary of the comments and staff’s response.

Issue 1:Rider A - Schedule of Rates for Back-up and
Maintenance Power (Section III)

“The
City commented that even though the Authority does not serve any customer under
Rider A, Rider A should be continued for customers that do install on-site generation
facilities.Staff agrees with the City’s
comment and recommends continuing the use of Rider A.

“The
City commented that the Authority should consider amending Rider A to allow the
Authority to negotiate discounted Rider A rates where applicable, as many other
utilities do.Staff recommends that
until a rate redesign study is performed, the production rates stated in Rider
A in the Single Tariffs be updated to reflect appropriate production rate
increases approved by the Trustees since 2004.

“The
City commented that the tariffs, as written, are unclear in that it may be
interpreted that Rider A is a charge in addition to the rates and charges
specified for each service classification.The City recommended that the Authority remove all references to Rider A
in each service classification and then clarify in Rider A that the back-up
charges provided in Rider A are designed to be alternative to the rates and
charges specified for each service classification.

“In response to the City’s comments, staff recommends
a change in the statement in Section IV of the Single Tariffs, from ‘Rates and
charges under this Service Classification may be subject to Rider A’ to ‘If
Rider A applies under this Service Classification, the Rates and Charges under
Rider A will replace the above production rates.’Staff also recommends that in Rider A of the
Single Tariffs, the following language be included in the Applicability
section: “The rates and charges shown below are substitute rates to the rates
and charges specified in Section IV of this tariff.’

“The
City asked to define two terms that are not defined in Rider A in the Energy
Charge Adjustment (‘ECA’) section, ‘Base Average Energy Cost’ and ‘Base
Incremental Energy Cost.’Staff
recommends that the ECA provision under Rider A be subject to the same ECA
provision described in the Single Tariffs (Section VI.A).Accordingly, for Rider A, all components for
calculating the ECA are included in Section VI.A.The ECA language in Rider A in the Single
Tariffs was modified to reflect this recommendation.

Issue 2:Calculation of the Bill - Components of
the Bill (Section III.A)

“The
City commented that the Authority’s use of the term ‘other’ was used in two
different contexts: as one of three general types of charges (Production,
Delivery Service and Other) and then as a component of Delivery Service that is
measured in ‘Charge Units’ of $/kW-month.With respect to the use of ‘other’ as a Bill Component of the Delivery
Service Charge, the City suggested replacing the Charge Units ($/kW-month) with
‘various’ since the charge units may vary depending on the type of cost being
recovered. Staff agrees with, and
recommends this change in the Single Tariffs.

“The
City recommends that the Authority clarify when and how it will determine to
issue a minimum bill for unmetered service.Staff views that the purpose of the NYC Single Tariff is not to address
how and when data are collected but how the calculation is done.Therefore, Staff believes that the language
in the NYC Single Tariff is clear on the calculation, however recommends
clarifying language on how unmetered service charges will be applied.

“The
City commented that there should be language in the termination-of-service
provision conditioning termination of service on the requirements of the
Customer Supply Contract.Staff agrees
with the City’s comment and recommends that the language ‘Unless otherwise
provided in the Customer Supply Contract’ be included in the Termination of
Service paragraph of the Minimum Bill provision in the NYC Single Tariff.

Issue 4:Common Provisions - Rules and Regulations
(Section V.A)

“The
City suggested the overriding effect of the Long Term Agreement (‘LTA’) (with
NYC Governmental Customers) be acknowledged.Staff agrees with the City’s comment regarding the potential conflicts
with the LTA and recommends adding a third paragraph to Section V.A of the NYC
Single Tariff as follows:“In the event of
any inconsistencies, conflicts or differences between any provisions of the
2005 Long Term Agreement and any of the agreements or documents referenced in
Section V, Common Provisions A.1 and 2, the provisions of the 2005 Long Term
Agreement shall govern.”Staff also
recommends adding similar language to the Westchester County Service Tariff, as
appropriate.

“Staff
recommends that these proposed Single Tariffs go into effect January 1, 2008
along with the 2008 production rates that will be presented to the Trustees for
their approval at their December 2007 meeting.

FISCAL
INFORMATION

“Adoption
of the proposed Single Tariffs has no financial impact.The changes proposed are administrative
changes and have no effect on current production or delivery service rates.

RECOMMENDATION

“The
Manager – Power Contracts recommends that the attached Single Tariffs be
approved and that the Trustees authorize the Corporate Secretary to file a
Notice of Adoption with New York State Department of State for publication in
the New York State Register for the
adoption of the Single Tariffs for the Authority’s New York City and Westchester County
Governmental Customers.

“It
is also recommended that the Senior Vice President – Marketing and Economic
Development, or his designee, be authorized to issue notice of final action to
the affected customers.

“The
Executive Vice President, General Counsel and Chief of Staff, the Executive
Vice President and Chief Financial Officer, the Senior Vice President –
Marketing and Economic Development and I concur in the recommendation.”

The
following resolution, as submitted by the President and Chief Executive
Officer, was unanimously adopted.

RESOLVED, That the Trustees adopt the consolidation
of the Authority’s current production and delivery services tariffs applicable
to its Governmental Customers, as set forth in the foregoing report of the
President and Chief Executive Officer; and be it further

RESOLVED, That the Corporate Secretary of the
Authority be, and hereby is, directed to file a Notice of Adoption with the New
York State Department of State for publication in the New York State Register in accordance with the State Administrative
Procedure Act and to submit such other notice(s) as may be required by statute
or regulation concerning the proposed tariff consolidation; and be it further

RESOLVED, That the Chairman, the President and Chief
Executive Officer and all other officers of the Authority are, and each of them
hereby is, authorized on behalf of the Authority to do any and all things, take
any and all actions and execute and deliver any and all certificates,
agreements and other documents to effectuate the foregoing resolution, subject
to the approval of the form thereof by the Executive Vice President, General
Counsel and Chief of Staff.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to
approve a change order to the existing contract with North American Energy
Services (‘NAES’) to implement capital projects necessary for the proper
maintenance and operation of the New York City Department of Environmental
Protection’s East Delaware and Neversink Hydroelectric Facilities (the ‘Facilities’).

“The City of New York
(‘City’), acting through its Department of Environmental Protection (‘NYC/DEP’),
concurs with the issuance of the change order and will reimburse the Authority
for all incurred costs on a monthly basis.

BACKGROUND

“In accordance with the
Authority’s Expenditure Authorization Procedures, the award of change orders
associated with non-personal services or equipment purchase contracts in excess
of $1 million requires Trustee approval.

DISCUSSION

“At their meeting on February 9, 2005, the Trustees authorized the
execution of new Long-Term Supplemental Electricity Supply Agreements (‘LTAs’)
with the New York City Governmental Customers, substantially in the form as
that executed with the City on March 18, 2005.Article XV of the March 18th LTA provides, subject to certain
conditions, that the Authority will operate the Facilities on behalf of the
City.

“At their meeting on September 26, 2006, the Trustees approved $2.144
million for the award of a contract to NAES to provide management, supervisory,
engineering, operational, administrative, technical and maintenance services in
addition to capital improvements for the Facilities.NAES mobilized in the fourth quarter of 2006
and continues to operate and maintain the Facilities.

“As presented at the September 2006 meeting, and based on engineering
studies of the Facilities, several future capital projects were identified as
necessary.During the course of
operations, the City requested that additional improvements be managed by the
Authority.

“Based on
studies conducted by NAES and recommendations made, a cost estimate for
providing drawings, specifications and implementation of the proposed capital
work was prepared.

“NAES has obtained cost estimates for the following capital projects:

East
Delaware

Tunnel Outlet

Priority

Cost

-

Assess/Test Contaminants-of-Concern Condition

1

$30,000

-

Remediate Contaminants of Concern

1

$500,000

-

Install Emergency Lighting and Evacuation
Alarm System

1

$100,000

-

Repair Main Plant Isolation Valve (DOW)

1

$750,000

-

Upgrade or Replace Main Generator
Fire Protection System

1

$200,000

-

Replace Existing Boilers and Control System

1

$85,000

-

Remove two USTs at EDTO, install AST

1

$150,000

-

15kV Switchgear Replacement

2

$330,000

-

Arc Flash Study

2

$40,000

-

Generator Exciter/Voltage Regulator Replacement

2

$585,000

-

Containment Separation, Modernization,
and Monitoring for Main Station Sumps

2

$200,000

-

Indoor Relay Control Panels

2

$600,000

-

New Oil Spill Containment and Monitoring System for Main
Transformers and Oil Containment Within Switchyard

3

$215,000

-

125VDC Battery/Battery Rack and Charger Replacement

3

$90,000

-

Relocate or Replace Revenue Metering

3

$100,000

-

Parking Lot Paving

3

$85,000

-

Install Motorized Gate

3

$20,000

-

Office/Bathroom Remodel

3

$100,000

-

Study Conversion of Greasing Systems to Biodegradable
Vegetable- Based Greases

“At this time, staff recommends
proceeding with only the most critical items (Priority 1), in the amount of
$3.61 million.It is expected that the
capital projects listed above will be completed by June 30, 2008.These cost estimates have been presented to
and approved by NYC/DEP.The figures
were presented to the City as part its proposed 2008 budget, totaling $5.38
million. The latter budget figure captures the O&M costs and
Priority-1-only capital improvements. On August 24, 2007, the City approved the
2008 budget.

“Contingent on Trustee approval,
NAES will now move forward with evaluating bids and awarding contracts to
complete the work.NAES, under the
Authority’s oversight, will provide project management services to ensure that
all related contracts are awarded per the Authority’s policies and procedures
and that the work is completed in a safe and reliable manner.

“The Authority will continue to directly market the electric-generating
energy, capacity and ancillary services and any other energy products produced
by the Facilities and for which a market exists on behalf of the City.

“The City has reviewed the estimated expenditures and agrees to proceed
with such improvements to increase the overall quality of the Facilities.Any award by NAES is conditioned on the
Authority’s prior approval.

FISCAL
INFORMATION

“Payments will be made from the
Authority’s O&M Fund with the City to reimburse all costs (direct and
administrative) associated with operating the Facilities.

RECOMMENDATION

“The Director – Budgets, the Corporate Secretary and Principal Attorney
II, the Vice President – Project Management, the Vice President – Procurement
and Real Estate and the Regional Manager – Central New
York recommend that the Trustees authorize $3.61 million for a
change order to North American Energy Services.

“The Executive Vice President, General Counsel and Chief of Staff, the
Executive Vice President – Corporate Services and Administration, the Executive
Vice President and Chief Financial Officer, the Senior Vice President and Chief
Engineer – Power Generation, the Vice President – Controller and I concur in
the recommendation.”

Mr.
Thomas Antenucci presented the highlights of staff’s recommendations to the
Trustees.In response to a question from
Chairman McCullough, Mr. Antenucci said that this additional work had been
contemplated at the time of the original contract.

The following resolution, as
submitted by the President and Chief Executive Officer, was adopted by a vote
of 5 to 1 with Trustee Besha recusing.

RESOLVED, That pursuant to the Guidelines
for Procurement Contracts and the Expenditure Authorization Procedures adopted
by the Authority, expenditures in the amount of $3.61 million are approved as
recommended in the foregoing report of the President and Chief Executive
Officer; and be it further

RESOLVED, That the
Chairman, the President and Chief Executive Officer and all other officers of
the Authority are, and each of them hereby is, authorized on behalf of the
Authority to do any and all things and take any and all actions and execute and
deliver any and all agreements, certificates and other documents to effectuate
the foregoing resolution, subject to the approval of the form thereof by the
Executive Vice President, General Counsel and Chief of Staff.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to
approve the initiation of Phase III of an ongoing security enhancement and
assessment program with a capital expenditure of $14.1 million from October
2007 thru December 31,2009.The expenditure represents enhancements to
the Authority’s facilities where security assessments are completed, including
final design and installation.

BACKGROUND

“The
Security Enhancement Program was established to identify and enhance the
protection of power generation and transmission infrastructure and assets that
are deemed most critical in terms of public safety and business
continuity.The program is supervised by
the Executive Security Team and uses specialized security consultants to assist
staff in evaluating and designing site-specific procedures and defenses to
address vulnerabilities.

DISCUSSION

“Phase
I of the Program has been completed, Phase II is under way and Phase III is now
in the early stages of implementation.

FISCAL INFORMATION

“Payments
will be made from the capital fund.

RECOMMENDATION

“The
Vice President – Project Management, the Vice President – Engineering and the
Vice President – Corporate Security and Inspector General recommend that the
Trustees approve Phase III of the Security Enhancement Program and authorize
capital expendituresof $14.1 million.

“The
Executive Vice President, General Counsel and Chief of Staff, the Executive
Vice President – Chief Financial Officer, the Senor Vice President and Chief
Engineer – Power Generation and I concur in the recommendation.”

Mr. Thomas Antenucci presented
the highlights of staff’s recommendations to the Trustees.In response to a question from Chairman
McCullough, Mr. Antenucci said that Phase III is expected to take two years.

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

RESOLVED, That the Security Enhancement Program – Phase III – Security
Enhancement Project is approved and that capital expenditures are hereby
approved to be committed in accordance with the Authority’s Expenditure
Authorization Procedures in the amount of $14.1 million; and be it further

RESOLVED, That the Chairman, the President
and Chief Executive Officer and all other officers of the Authority are, and
each of them hereby is, authorized on behalf of the Authority to do any and all
things and take any and all actions and execute and deliver any and all
agreements, certificates and other documents to effectuate the foregoing
resolution, subject to the approval of the form thereof by the Executive Vice
President, General Counsel and Chief of Staff.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to
approve the award of a selected number of multiyear procurement contracts
relating to professional investment management services in connection with the
Authority’s Other Post-Employment Benefits Trust Fund and to authorize the
appointment of Lehman Brothers Inc. as an additional dealer for marketing the
Authority’s Taxable Commercial Paper Notes.

BACKGROUND

“Section 2879 of the Public
Authorities Law and the Authority’s Guidelines for Procurement Contracts
require the Trustees’ approval for procurement contracts involving services to
be rendered for a period in excess of one year.The terms of the contracts considered herein are for more than one year
and, therefore, Trustee approval is required.

“Certain Governmental Accounting
Standards Board (‘GASB’) standards[1]
issued in 2004 require governmental employers to account for other
post-employment benefits (‘OPEB’) liabilities on an ‘accrual’ basis, i.e., as
the benefits are earned during the working career of the employee, rather than
the ‘pay-as-you-go’ basis, where costs are recorded as the benefits are paid
during the employee’s retirement.As of
December 31, 2006, the Authority’s unfunded actuarial accrued liability for
OPEB was $325 million.

“At
their meeting of December 19, 2006, the Trustees authorized staff to initiate
certain actions to establish a separately managed Trust for OPEB, which
included: establishing the parameters of a trust; developing investment
guidelines and competitively searching and/or soliciting for a financial
management consultant, investment manager(s) and Trustee Custodian.

“At
their July 31, 2007 meeting, the Trustees (1) approved the creation of the New
York Power Authority Other Post-Employment Benefits Trust; (2) adopted the
Trust Investment Policy Statement; (3) appointed The Bank of New York (Mellon)
as Trustee Custodian and (4) approved an initial $225 million funding plan,
including the transfer of $100 million from the OPEB Reserve within the Operating
Fund and the issuance of $125 million in taxable commercial paper for deposit
into the Trust.

“The
Authority’s Commercial Paper Program is authorized pursuant to the Resolution
Authorizing Commercial Paper Notes (‘Resolution’) adopted by the Authority on
June 28, 1994, as subsequently amended and supplemented.The Resolution authorizes the issuance of
general obligation notes known as ‘Power Authority Commercial Paper Notes,’
which may be issued as separate series of Notes from time to time in accordance
with the provisions of the Resolution.Currently, three series of Commercial Paper Notes, designated as Series
1, Series 2 and Series 3, have been authorized and are outstanding.A fourth series, Series 4 Notes, is
authorized, but no Series 4 Notes are currently outstanding.Series 1 and Series 2 consist of Notes, the
interest on which is excluded from gross income for federal income tax purposes
(‘Tax-Exempt Notes’) and Series 3 consists of Notes, the interest on which is
not excluded from gross income for federal income tax purposes (‘Taxable Notes’).The Resolution authorizes the issuance of
Series 1 Notes up to a maximum amount of $400 million, Series 2 Notes up to a
maximum amount of $450 million, Series 3 Notes up to a maximum amount of $350 million
and Series 4 Notes up to a maximum amount of $220 million.

“The
Trust Investment Policy Statement included a strategy for diversification among
five Asset Types and 10 classes so as to be aligned with the Authority’s
overall return objectives and risk tolerances.The following table summarizes these various categories and the initial
percentage targets for each class of investment:

Asset Type

Target

% Allocation

Range of

Allocation

Equities

61%

Domestic Equity

42%

37% - 47%

- Large Cap – Value

-9%

- Large Cap – Growth

-9%

- All Cap –
Core

- 18%

- Small Cap – Core

-6%

International Equity

19%

14% - 24%

- Value

- 9.5%

- Growth

- 9.5%

Real Estate (REITs)

6%

1% - 11%

- Public

- 6%

- Private

- 0%

Fixed Income

33%

Domestic Fixed Income

30%

25% - 35%

- Core Fixed Income

- 15%

- Intermediate

- 15%

Cash Equivalent

3%

0% - 10%

DISCUSSION

“Pursuant
to the above-mentioned Trustee authorization, staff solicited proposals for
professional investment management services for the 10 investment classes by
notice to a number of firms providing such services and by advertisement in the
New York State Contract Reporter.The
Authority received a total of 52 proposals from 32 different firms, as
summarized on Exhibit ‘13-A.’ In nine of the 10 classes, a sufficient number of
responses were received for consideration.In one class, Real Estate – Private, only one response was received and
this was deemed insufficient to make a recommendation.Staff determined that the proposed size of
the Authority’s planned investment in this class was too small to attract the
interest of investment managers, so the portion of assets allocated for this
class will be distributed among the other investment classes within the already
approved investment ranges.

“Staff, with the support of its
financial advisor, PFM Advisors, evaluated each proposal according to various
criteria, including, but not limited to, performance, performance consistency
and volatility, correlation to market, schedule of fees and supporting
organizational capabilities.Based on
this evaluation, the following recommendations are presented:

“The
recommended manager for each class has shown steady performance against its
respective benchmark averages over the past seven years.Overall risk-adjusted returns showed solid
results and each firm is backed by appropriate research support.On the basis of the evaluation criteria
established for this review by staff and its financial advisor, each of the
recommended investment managers scored the highest in their respective
categories.In order to achieve
consistency and stability in the management of the Trust’s assets, it is
recommended that each of the above-listed investment managers be awarded a
5-year contract, subject, however, to early termination at any time by the
Authority on 60 days’ notice.

“With respect to its Commercial Paper
Program, the Authority currently uses a field of seven commercial paper
dealers, including:Bear Stearns,
Citigroup, Goldman Sachs, JPMorgan, Lehman Brothers, RBC Dain Rauscher and UBS,
only two of which are authorized for the Taxable Notes Program.With the anticipated increase in the use of
Taxable Notes to support the establishment of the OPEB Trust, it is recommended
that another dealer be added to the list of authorized dealers for the Taxable
Notes.Accordingly, staff is
recommending that Lehman Brothers, which is already an authorized dealer of the
Authority’s Tax-Exempt Notes, be included as an additional dealer for marketing
the Authority’s Taxable Commercial Paper Notes.This authorization would provide increased flexibility and diversification
for the Commercial Paper Note program with a dealer that is well known to the
Authority and would thus better allow the Authority to meet its OPEB
obligations.

FISCAL INFORMATION

“The
fees for the Investment Managers will be paid from OPEB Trust Fund (‘Fund’)
assets.While the fee structure for each
asset class varies, the overall average totals 49 basis points (a basis point
is equal to 1/100th of 1 percent, or 0.01%).The fees should equal about $1.1 million per
year, growing somewhat as the Fund’s assets grow.Over the course of the recommended 5-year
term of the investment management contracts, fees are estimated to total about
$6.6 million, assuming a normal growth rate in the Fund’s Assets.

“The
commercial paper that staff intends to amortize over a 10-year period will
provide additional earning opportunities for the Fund.It is estimated that the issuance of
commercial paper for this purpose will provide more than $20 million in
additional savings.

RECOMMENDATION

“The Vice President – Finance
recommends the Trustees’ approval of the award of multiyear service contracts
to the nine investment managers so named and described above for the New York
Power Authority Other Post-Employment Benefit Trust Fund and that the Trustees
also appoint Lehman Brothers Inc. as an additional dealer for marketing up to
$125 million of the Authority’s Taxable Commercial Paper Notes.

“The Executive Vice President,
General Counsel and Chief of Staff, the Executive Vice President and Chief
Financial Officer and I concur in the recommendation.”

Mr.
Donald Russak presented the highlights of staff’s recommendations to the
Trustees.In response to a question from
Chairman McCullough, Mr. Russak said that staff would report back to the
Trustees on the financial performance of the Trust Fund on a quarterly basis
beginning next year.

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted
by the Authority, the award and funding of the multiyear investment management
service contracts for the New York Power Authority Other Post-Employment
Benefits Trust (“Trust”) are hereby approved and their execution by the
Executive Vice President and Chief Financial Officer or his designee is
approved, subject to the approval of the form thereof by the Executive Vice
President, General Counsel and Chief of Staff, on behalf of the Authority, as
recommended in the foregoing report of the President and Chief Executive
Officer; and be it further

RESOLVED, That Lehman Brothers Inc. is appointed as an additional
Commercial Paper Dealer for marketing up to $125 million of the Authority’s
Taxable Commercial Paper Notes; and be it further

RESOLVED, That the Vice President – Finance or the Treasurer is hereby
authorized to enter into a Commercial Paper Dealer Agreement with Lehman
Brothers Inc. for marketing up to $125 million of the Authority’s Taxable
Commercial Paper Notes, having such terms and conditions as the Vice President
– Finance or the Treasurer deems necessary or advisable, subject to the
approval of the form thereof by the Executive Vice President, General Counsel
and Chief of Staff; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer
and all other officers of the Authority are, and each of them hereby is,
authorized on behalf of the Authority to do any and all things and take any and
all actions and execute and deliver any and all agreements, certificates and
other documents to effectuate the foregoing resolution, subject to the approval
of the form thereof by the Executive Vice President, General Counsel and Chief
of Staff.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to
amend the Authority’s By-laws to (i) provide for the creation of a new
position:Executive Vice President –
Energy Marketing and Corporate Affairs; (ii) increase the membership of the
Governance Committee to three members and (iii) reflect ancillary and
incidental corrections.

“For the reasons set forth below, the Trustees are
requested to approve the following amendments to the Authority’s By-laws:

(1) Amend
Article IV, Section 2 to provide for the election of the Executive Vice
President – Energy Marketing and Corporate Affairs as a non-statutory officer
and to correct the title of the head of Internal Audits and Corporate
Compliance from Director to Vice President;

(2) Amend
Article IV, Section 3 to add the title of Executive Vice President – Energy
Marketing and Corporate Affairs to the list of non-statutory officers having a
term of office;

(3)Amend
Article IV, Section 6(G) to amend the duties of the Executive Vice President –
Corporate Services and Administration to delete those duties now assigned to
the Executive Vice President – Energy Marketing and Corporate Affairs;

(4)Amend
Article IV, and add a new Section 6(I), to establish the reporting responsibilities
and duties of the Executive Vice President – Energy Marketing and Corporate
Affairs;

(5)Amend
Article V, Section 1 to add the Executive Vice President – Energy Marketing and
Corporate Affairs to the Executive Management Committee; and

(6)Amend
Article V, Section 3 to increase the number of Governance Committee members
from two to three.

“The
amended By-laws are set forth in Exhibit ‘14-A1’ attached hereto.A redlined version with strikethroughs
denoting deletions and underlining reflecting new language is attached as
Exhibit ‘14-A2.’

DISCUSSION

Creation of New Senior Management
Position

“The
new senior management position of Executive Vice President – Energy Marketing
and Corporate Affairs is being created to consolidate certain of the
Authority’s functional units within a single business unit so that the
Authority can more effectively customize and promote offerings around the
Authority clients’ strategic needs in the advancement of the Authority’s
mission.These business units, Energy
Services and Technology, Marketing and Economic Development, Power Resource
Planning and Acquisition and Governmental and Public Affairs, by working
together, will be able to better coordinate the Authority’s outreach efforts to
its key external stakeholder groups.As
a result of the creation of the new position, the By-laws require amendments to
reflect the change.

Increase
in Membership of the Governance Committee

“The
Public Authorities Accountability Act of 2005 (the ‘Act’) added a new section
to the Public Authorities Law (Section 2824) clearly delineating the roles and
responsibilities of board members of public authorities.The core responsibility of the Trustees is
the direct oversight of the Authority’s chief executive and other senior management
in the effective and ethical management of the Authority.The Act also increased the Authority’s Board
of Trustees from five to seven members.In addition, the Act requires that boards of public authorities be
informed of corporate governance trends and update their corporate governance
principles.The Governance Committee
currently performs this function.However, to strengthen its role, it is proposed that the Governance
Committee be increased from two to three members.

“Increasing
the Governance Committee from two to three members will aid significantly in
providing for greater Trustee participation in the governing affairs of the
Authority.In addition, in the event
that one committee member is unable to participate at a scheduled meeting, at
least two members will be present to review, consider and approve/disapprove
items.Moreover, increasing the number
of Committee members provides for a truly deliberative process consistent with
sound governance principles.

RECOMMENDATION

“The Executive Vice President,
General Counsel and Chief of Staff, the Executive Vice President – Corporate
Services and Administration, the Executive Vice President and Chief Financial
Officer and I recommend that the Trustees approve the proposed By-laws amendments.
“

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

RESOLVED, That the
revisions to the By-laws, which By-laws were adopted on February 29, 1989, and
last amended on April 24, 2007, and which revisions are discussed in the foregoing
report of the President and Chief Executive Officer and are attached hereto as
Exhibit “A-1,” be hereby adopted; and be it further

RESOLVED, That the
President and Chief Executive Officer, the Executive Vice President, General
Counsel and Chief of Staff, the Executive Vice President – Chief Financial
Officer, the Corporate Secretary, the Vice President – Security and Inspector
General, the Treasurer, the Vice President – Ethics and Regulatory Compliance,
the Vice President – Procurement and Real Estate, the Vice President – Internal
Audit and Corporate Compliance and their designees are hereby authorized to
take all actions and to do all things necessary to implement such amended
By-laws and to assist the operations and oversight functions of such Governance
Committee.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested: (1) to
amend both the Governance and Audit Committee Charters to require an agenda and
minutes for each meeting in accordance with the Open Meetings Law, and to
provide for a majority of the Committee members to constitute a quorum; (2) with
respect to the Governance Committee Charter, to include review of Authority
By-Laws and corporate policies, including those related to equal opportunity
employment, (3) with respect to the Audit Committee Charter, to change the
number of regularly scheduled meetings from at least three times per year to at
least four times per year and (4) to reflect ancillary and incidental
corrections.

BACKGROUND

“The Public Authorities
Accountability Act of 2005 (‘Accountability Act’) added a new section to the
Public Authorities Law (Section 2824) delineating the roles and
responsibilities of board members of public authorities including, but not
limited to, oversight of the authority’s senior management in the effective and
ethical management of the authority and oversight and review of the authority’s
fundamental financial, management and operational policies and procedures.The Accountability Act also required the
Authority to have both a Governance Committee and an Audit Committee.To that end, on February 28, 2006, the
Trustees established a Governance Committee by amending the Authority’s
By-laws, adopted a Governance Committee Charter and amended the existing Audit
Committee Charter.

“The Governance Committee is
required to: (1) oversee Authority management and policies relating to ethical
conduct; (2) update and revise the Authority’s Code of Conduct; (3) review and
update the Authority’s policies on procurement of goods and services and the
acquisition and disposal of real and personal property and (4) adopt a
corporate policy on the protection of whistleblowers from retaliation.

“The
Audit Committee is responsible for oversight of the Authority’s: (1)
relationship with independent accountants, (2) internal audit process, (3)
internal control systems and (4) complaints to and investigations by the Vice
President – Corporate Security and Inspector General.On February 28, 2006, the Trustees amended
the Authority’s By-laws and the Audit Committee Charter as necessary, to
strengthen the role of the Authority’s Audit Committee by providing for the
Office of Internal Audits and Corporate Compliance (‘Internal Audit’),
Committee appointment and compensation of the head of Internal Audit and
responsibility for making recommendations concerning the staffing of Internal
Audits and its related functions.Oversight and reporting requirements were also established for the
Office of the Inspector General.

DISCUSSION

“The
Accountability Act required that the Authority’s Board of Trustees be increased
from five to seven independent members and that members not simultaneously
serve as either Chairman of the Board of Trustees or in a position of Authority
management.Increasing membership of the
Governance Committee to three members, similar to that of the Audit Committee,
and providing for a majority of the Committee members to constitute a quorum
for both the Governance Committee and the Audit Committee will significantly
enhance Trustee participation in the governing affairs of the Authority.In the event that one committee member is
unable to participate at a scheduled meeting, the presence of a majority of
Committee members will be required for action to be taken.Requiring independent, non-conflicted members
of the Committee and increasing the quorum to a majority will insure a
deliberative process consistent with sound audit and governance principles.

“Additionally,
the Accountability Act created the State Authority Budget Office (‘ABO’). The
ABO has authority to review, audit and monitor compliance with operations and
practices required of public authorities.Although the Authority independently performs such functions, recent ABO
audits of other public authorities have recommended that Committee charters
specifically require that an agenda and minutes be prepared for each meeting,
and that the Governance Committee review all corporate policies.

“With
respect to the Governance Committee Charter, the Trustees are requested to
amend: (i) Section A(1) to increase the membership of the Governance Committee
from two Trustees to three independent Trustees who are not the Chairman or in
any other position of Authority management; (ii) Section A(4) to require that
an agenda be prepared and distributed prior to each meeting, to require that
minutes of each meeting be prepared in accordance with the Open Meetings Law
and to change the number of Committee members constituting a quorum from one to
a majority of the Committee members and (iii) Section B to include review of
Authority By-laws and corporate policies, including those related to equal
opportunity, consistent with ABO recommendations.The proposed amended Governance Committee
Charter is attached as Exhibit ‘15-A1.’A redlined version with strikethroughs denoting deletions and
underlining reflecting new language is attached as Exhibit ’15-A2.’

“With respect to the Audit
Committee Charter, the Trustees are requested to amend:

(i)
Section A(1) to provide that Committee members must be independent and shall
not simultaneously serve as Chairman or in any other position of Authority
management; (ii) Section A(4) to require that an agenda be prepared and
distributed prior to each meeting, to require that minutes of each meeting be
prepared in accordance with the Open Meetings Law and to change the number of
Committee members constituting a quorum from one to a majority of the Committee
members and (iii) Sections A(4) and B(3) and (4) to increase the number of
regularly scheduled Committee meetings from at least three to at least four per
year.In addition, changes have been
that are ancillary to those above and/or appropriate for clarity.The proposed amended Audit Committee Charter
is attached as Exhibit ‘15-B1.’A
redlined version with strikethroughs denoting deletions and underlining
reflecting new language is attached as Exhibit ‘15-B2.’

FISCAL IMPLICATIONS

“None.

RECOMMENDATION

“The Executive Vice President,
General Counsel and Chief of Staff and I recommend that the Trustees approve
the proposed amendments to the Governance Committee Charter and the Audit
Committee Charter.”

Mr.
Thomas Kelly presented the highlights of staff’s recommendations to the
Trustees.Chairman McCullough said that
the proposed amendments reflect recommendations made as a result of audits of
other authorities’ Audit Committee and Governance Committee charters.He said that the fourth meeting of the Audit
Committee is essential in order to provide the Committee with the opportunity
to meet directly with the Authority’s independent auditors.Mr. Kelly added that the Authority has historically
been ahead of where the State is going in matters of authority governance and
that the Authority will continue to stay in front of the law and any directives
from the Authority Budget Office.

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

RESOLVED, That
Section A(1) of the Governance Committee Charter be amended to increase the
membership of the Governance Committee from two Trustees to three independent
Trustees who do not serve as Chairman or in any other position of Authority
management; and be it further

RESOLVED, That
Section A(4) of the Governance Committee Charter and the Audit Committee
Charter be amended to require that an
agenda be prepared and distributed prior to each meeting, minutes of each
meeting be prepared in accordance with the Open Meetings Law and the number of Governance Committee and Audit
Committee members required for a quorum be increased from one to a majority of
the Committee members; and be it further

RESOLVED, That
Section A(1) of the Audit Committee Charter be amended to provide for
independent members, none of whom can serve as Chairman or in any other
position or Authority management, and be it further

RESOLVED, That
Sections A(4) and B(3) and (4) of the Audit Committee Charter be amended to
increase the number of regularly scheduled Committee meetings from at least
three to at least four per year; and be it further

RESOLVED, That the
attached Governance Committee Charter and Audit Committee Charter be adopted
substantively in the form proposed in Exhibits “15-A” and “15-B.”

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to
appoint James A. Besha to the Governance Committee.

BACKGROUND

“On February 28, 2006, the
Trustees, in accordance with the provisions of the Public Authorities
Accountability Act, established a Governance Committee by amending the
Authority’s By-laws, creating a new Section 3, Article V.In addition, on February 28, 2006, the
Trustees adopted the Charter of the Governance Committee.

“On October 30, 2007, the Trustees
(i) amended Section 3, Article V of the Authority’s By-laws to increase the
membership of the Governance Committee from two Trustees to three Trustees
other than the Chairman and (ii) amended the Charter of the Governance
Committee to increase the membership of the Governance Committee from two to
three Trustees who do not serve as Chairman or in any other position of
Authority management.

“Governance Committee members, who
are selected from eligible Trustees by vote of the Trustees, serve for periods
of four years and may serve for additional periods, subject to their terms of
office as Trustees.

DISCUSSION

“In accordance with Article V,
Section 3 of the Authority’s By-laws and the Charter of the Governance
Committee, the Trustees are requested to select James A. Besha as a member of
the Governance Committee, effective October 30, 2007 to serve for a term ending
October 30, 2011.”

RECOMMENDATION

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

RESOLVED, That James A. Besha is hereby selected as a member of the
Governance Committee, effective October 30, 2007, to serve for a term ending
October 30, 2011.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested
to elect Gil C. Quiniones to the new position of Executive Vice President –
Energy Marketing and Corporate Affairs of the Authority, effective as of
October 29, 2007.

BACKGROUND AND DISCUSSION

“Mr.
Quiniones has served as Senior Vice President of Energy and Telecommunications
at the New York City Economic Development Corporation (‘NYCEDC’).At NYCEDC, Mr. Quiniones helped spearhead
discount energy programs for manufacturers and small businesses; arrangements
for expanding the city’s use of renewable energy such as wind power and efforts
to bring about construction of ‘green’ buildings whose sustainable features
reduce energy costs, lower carbon emissions and contribute to improved worker
health and productivity. As chairman of Mayor Michael R. Bloomberg’s Task Force
on Energy, Mr. Quiniones had a pivotal role in assessing the city’s future
energy needs and in recommending specific policies and programs for affordable,
clean and dependable electricity supplies and maximizing energy efficiency.

“Also
while at NYCEDC, Mr. Quiniones greatly contributed to the Power Authority’s
successful partnership with New York
City in meeting the electricity needs of schools,
hospitals, street lights, subways, commuter trains, bridges, tunnels, airports
and other public facilities.

“Prior
to joining NYCEDC, Mr. Quiniones co-founded Con Edison Solutions, Inc. (‘CES’),
an energy services company based in White
Plains and a wholly owned subsidiary of Con
Edison.Prior to that, he spent seven
years in various positions of increasing responsibility at Con Edison.

RECOMMENDATION

“Based on his substantial
knowledge of energy and telecommunications, his innovative and results-oriented
management skills and his strong expertise and record of developing regulatory,
legislative and policy strategies it is recommended that, pursuant to Section 2
of Article IV of the By-Laws, Gil C. Quiniones be elected to fill the
non-statutory new position of Executive Vice President – Energy Marketing and
Corporate Affairs, for a term expiring at the next annual meeting of the
Trustees in March 2008, or until his successor is elected.”

The following resolution, as submitted by the
President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That Gil C. Quiniones of New York, New York,
be, and hereby is, elected, pursuant to Section 2 of Article IV of the By-Laws,
as Executive Vice President – Energy Marketing and Corporate Affairs of the
Power Authority, effective as of October 29, 2007, for a term of office
expiring at the next annual meeting of the Trustees or until his successor is
elected.

The President and Chief Executive Officer submitted the following
report:

“The following schedule of meetings for the year 2008 is recommended:

DateLocationTime

January
29, 2008WPO11:00
a.m.

February
26, 2008WPO11:00
a.m.

March
25, 2008 - AnnualWPO11:00
a.m.

April
29, 2008POLETTI11:00
a.m.

May
20, 2008B-G11:00
a.m.

June
24, 2008NIAGARA11:00
a.m.

July
29, 2008WPO11:00
a.m.

No Meeting in August

September
23, 2008WPO11:00
a.m.

October
28, 2008WPO11:00
a.m.

November
25, 2008WPO11:00
a.m.

December
16, 2008WPO11:00
a.m.

RECOMMENDATION

“The
President and Chief Executive Officer and I support the proposed schedule for the
Authority’s Trustees’ Meetings for the year 2008, as set forth in the foregoing
memorandum.”

Ms.
Anne Cahill presented the highlights of staff’s recommendations to the
Trustees.In response to a question from
Chairman McCullough, Ms. Cahill said that the Annual Meeting had been scheduled
for March instead of April due to the fact that several yearly reports are due
90 days following the end of the Authority’s fiscal year.Chairman McCullough pointed out to the other
Trustees that the schedule is not carved in stone and that there was also the
possibility that a special meeting or meetings might need to be scheduled.

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

RESOLVED, That the schedule of Trustees’ Meetings for the year 2008, as set forth in the attached foregoing
report of the Corporate Secretary, be, and hereby is, approved.

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

WHEREAS, Leonard N. Spano served with extraordinary distinction as a
member of the New York Power Authority’s Board of Trustees during a period of
significant challenge and accomplishment for the Authority; and

WHEREAS, Mr. Spano brought to his duties as a Trustee a singular blend
of experience, insight and pragmatism acquired during a career of 34 years in
public service that made him a Westchester County institution and in his
private-sector role as head of a prominent home heating and fuel business; and

WHEREAS, Mr. Spano’s tenure, beginning in June 2006, was marked by a
series of noteworthy developments ranging from the Power Authority’s receipt of
a new 50-year federal license for the Niagara Power Project and its completion
of a major upgrade at that facility to continuing efforts to extend the
Authority’s leadership in promoting energy efficiency, new technologies and
clean transportation; and

WHEREAS, Mr. Spano also participated in a number of Trustee actions that
served to create or retain hundreds of thousands of jobs across New York State
in a time of transition for the state’s economic development power programs;
and

WHEREAS, his Power Authority appointment represented but the latest
chapter in a longstanding commitment to service that began with Mr. Spano’s
three years in the United States Marine Corps and was evidenced throughout his
22 years as a member of the Westchester County Board of Legislators and 12 as
County Clerk; and

WHEREAS, this Board valued not only the talent and the dedication but
also the empathy and the consistent good humor that were hallmarks of Mr.
Spano’s long and successful career as an elected official—and that continue to
serve him well as the head of a family of 16 children, 39 grandchildren and two
great-grandchildren; and

WHEREAS, with his term having concluded, Mr. Spano has stepped down
from the Board;

NOW THEREFORE BE IT RESOLVED, That the Trustees of the Power Authority
of the State of New York express their profound thanks and appreciation to
Leonard N. Spano for his service to the Power Authority and throughout his many
years in public life, and that they wish him; his wife, Josephine; and their
remarkable and close-knit family a future of health, happiness and fulfillment.

“Mr.
Chairman, I move that the Authority conduct an Executive Session pursuant to
Section 105(1)(d) of the Public Officers Law to discuss issues associated with
pending litigation with: (i) General Electric et al. and (ii) Entergy Nuclear
Fitzpatrick, LLC and Entergy Nuclear Indian Point 3, LLC.”Upon motion duly made and seconded,
an Executive Session was held.

Chairman
McCullough announced to any members of the public who might be viewing a
webcast of the meeting that the Trustees would now be going into Executive
Session for the purpose of discussing matters in litigation.He said that the Trustees would return after
the Executive Session to take action on one of the items discussed in Executive
Session.

The
President and Chief Executive Officer submitted the following report:

SUMMARY

“The
Trustees are requested to approve the terms of a settlement of claims between
the Authority and General Electric Company (‘GE’) which is intended to resolve all disputes that arose
between the Authority and GE in
connection with the construction of the Authority’s 500 MW Combined Cycle
Project (‘500 MW Project’), pursuant to its GE engineering and procurement
contract effective October 29, 1999.

BACKGROUND

“The 500 MW Project began
commercial operations in December 2005, 21 months after the scheduled
completion date.By that time, it was
apparent that there were several outstanding technical issues that had to be
resolved with GE in order for the power plant to perform as anticipated.In October 2006, the Authority filed a
complaint against GE and five of its subcontractors in connection with the
design and construction of the project.In addition to correcting the outstanding technical matters, the Authority
sought to recover certain damages due to delays and cost overruns.GE has asserted that it will seek recovery of
certain damages it incurred due to delays in construction caused by the
Authority.

“The Authority and GE agreed to
suspend pursuit of the lawsuit in order to attempt to resolve the dispute
through mediation.The parties agreed to
a three-day mediation session that was set to begin on November 7, 2007.

“Prior to that scheduled mediation,
executives from GE and the Authority met and resolved this dispute.

DISCUSSSION

“The
Authority and GE have agreed in principle to resolve their outstanding claims
relating to the 500 MW Project pursuant to a confidential settlement
agreement.The key provisions of that
settlement are set out in a confidential term sheet presented to the Trustees
in Executive Session.Should the
Trustees approve the settlement, the parties have agreed to discontinue the
pending lawsuit and release each other from any claims arising out of the 500
MW Project, except those arising under the settlement or any remaining
obligations under the contract.

“The
proposed resolution of this dispute is in the best interests of the
Authority.It renders the mediation
unnecessary and avoids what would have been a costly and prolonged
litigation.A trial of this matter would
have involved complex engineering issues concerning power plant design and
construction where the likely resolution of such issues, both as to liability
and damages, was not readily foreseeable.In addition, resolving the dispute without the necessity of contentious
litigation allows the parties to continue what has historically been a
constructive business relationship.

FISCAL INFORMATION

“Payment
will be made from the Authority’s Capital Fund.

RECOMMENDATION

“The
Senior Vice President and Chief Engineer – Power Generation, the Executive Vice
President and Chief Financial Officer and the Executive Vice President, General
Counsel and Chief of Staff recommend that the Trustees approve the settlement between
the Authority and General Electric Company and authorize the Executive Vice
President, General Counsel and Chief of Staff to execute any and all documents
necessary to effectuate that settlement consistent
with the terms in the confidential term sheet presented to the Trustees.I concur in the recommendation.”

Mr. Thomas Kelly presented the
highlights of staff’s recommendations to the Trustees.Chairman McCullough complimented Mr. Kelly,
his staff and everyone else who was involved in negotiating this settlement.

The following resolution, as
submitted by the President and Chief Executive Officer, was unanimously
adopted.

RESOLVED, That the Trustees approve the settlement of a dispute between
the Authority and General Electric Company arising out of the Authority’s
construction of its 500 MW Project; and be it further

RESOLVED, That the Executive Vice President, General Counsel and Chief
of Staff, or his designee, is hereby authorized to execute any and all
documents needed to effectuate such settlement and dismiss the Authority’s
lawsuit, and to do such other and further things as are necessary to effectuate
the foregoing; and be it further

RESOLVED, That the
Chairman, the President and Chief Executive Officer and all other officers of
the Authority are, and each of them hereby is, authorized on behalf of the
Authority to do any and all things, take any and all actions and execute and
deliver any and all agreements, certificates and other documents to effectuate
the foregoing resolution, subject to the approval of the form thereof by the
Executive Vice President, General Counsel and Chief of Staff.

The
next Regular Meeting of the Trustees will be held on Tuesday, November 27, 2007, at 11:00 a.m.,at the ClarenceD.RappleyeaBuilding, White Plains, New York,
unless otherwise designated by the Chairman with the concurrence of the
Trustees.

Closing

On motion duly made and seconded, the meeting was
adjourned by the Chairman at approximately
12:45 p.m.